To mitigate the impact of the poten

To mitigate the impact of the potential change in loan demand, we control for bank-level total loan growth, aggregate-level loan growth, and term spreads in our baseline regression. We further implement the following robustness analysis of our results: for the cross-sectional difference in local loan demand and the local business cycle, we control for MSA characteristics such as population, income per capita, and the unemployment rate. We restrict our sample to the local banks that operate mainly in a single MSA, so that our MSA-level controls can better capture the economic environment faced by banks. Using the Summary of Deposits, we define local banks as banks with more than 70% of their deposits on average from one MSA. Local banks are smaller, less levered, have more liquid assets, and rely more on retail deposits and less on wholesale funding.This restricts our sample size to 86,060.