Unintended effects of broadband grants on bank branches

Abstract

The Community Connect Grant (CCG) Program was created in 2002 to provide financial assistance for the provision of broadband service in rural areas. Although it aimed to strengthen the rural economy, it is possible that an increase in internet usage due to the program could have induced bank branch closures, which could have had unintended effects on the economy. This paper discusses the mechanism by which the program affects bank branches and estimates the magnitude of its effects using an event study model and find that receiving benefits from this program decreases the number of bank branches.