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US banking deregulation and local economic growth: Direct effects and externalities

Author

Listed:
  • Pieter IJtsma
  • Sherrill Shaffer
  • Laura Spierdijk

Abstract

This study investigates the effects of banking deregulation on county-level economic growth in the U.S. during the 1970–2000 period. Our main contribution to the literature is that we analyze both the direct and external effects of banking deregulation on local economic growth. For the regions South, West and Northeast, we find significantly positive long-run direct effects of intrastate branching deregulation on the expected growth rates of counties in the deregulated state itself, up to several percentage points. We also establish significantly positive long-run external effects on the expected growth rates of counties adjacent to the deregulated state, up to several tenths of percentage points. We do not find such robust effects for interstate banking deregulation.

Suggested Citation

  • Pieter IJtsma & Sherrill Shaffer & Laura Spierdijk, 2019. "US banking deregulation and local economic growth: Direct effects and externalities," CAMA Working Papers 2019-80, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2019-80
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2019-10/80_2019_ijtsma_spierdijk_shaffer.pdf
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    More about this item

    Keywords

    U.S. banking deregulation; economic growth; externalities;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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