Geospatial Evidence for Diversification Effects in Branch Banking Deposit Stability: A Case Study in Fracking

Jacob Wiesenthal


Faculty Advisor: John C. Hudson


Jacob Wiesenthal is a senior in Weinberg College from Anthem, Arizona. He is majoring in Economics and Geography with a focus on health and population econometrics. His work in digital healthcare engagement has helped thousands of Arizonans schedule COVID-19 vaccine appointments, and on campus he helps manage a 501(c)(3) nonprofit startup that converts leftover foreign currency to fund summer camps for underprivileged youth in Chicago. Jacob will be continuing his quantitative research work in the field of healthcare economics in Cambridge, Massachusetts following graduation.


The core idea behind my research is to introduce natural geography to the study of banking and to assess the effect on deposit variance of having a geographically diverse portfolio of branches. In particular, I wanted to take advantage of a unique case study in fracking in order to design a causal model implying geographic diversity as a means for greater financial stability and leverage.

I was initially inspired by CAPM and the idea that a firm could engage in risk-taking activities without taking on the full magnitude of that risk. I wondered whether this insight could be applied in contexts other than investments, and if it might make sense to consider geographical places like assets. I decided that branch banking was the ideal topic for investigating this because of the public records kept by the FDIC which offered a key link between standardized performance metrics and locations. Likewise, I realized that the economic exogeneity and geographic derivation of fracking made it a great candidate for exploring causality.

Now that it is understood how geographic diversification impacts risk in both deposits and lending, banks can optimize their locational strategy to minimize risk and ultimately increase their leverage. Moreover, future research will likely emphasize the prospect of online banking and the ability of fintechs to achieve geographic diversification by the implicit accessibility of their platforms. This notion demonstrates that even in a predominantly digital world, geography remains a driving force behind economic progress.

I will be joining a healthcare strategy consulting firm in Cambridge, Massachusetts where I can connect my background in health and population economics with my love for quantitative research.