Firm volatility and banks: evidence from U.S. banking deregulation
AbstractThis paper exploits the staggered timing of state-level banking deregulation in the United States during the 1980s to study the causal effect of banking integration on the volatility of non-financial corporations. We find that firm-level employment, production, sales, and cash flows are less volatile after interstate banking deregulation, particularly for firms that have limited access to external finance. This finding suggests that bank-dependent firms exploit wider access to finance after deregulation to smooth out idiosyncratic shocks. In fact, short-term credit becomes less pro-cyclical after out-of-state bank entry is permitted. Finally, lower volatility in real-side variables after deregulation translates into lower idiosyncratic risk in stock returns.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2009-46.
Date of creation: 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-BAN-2010-01-16 (Banking)
- NEP-BEC-2010-01-16 (Business Economics)
- NEP-FMK-2010-01-16 (Financial Markets)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cappiello, Lorenzo & Kadareja, Arjan & Kok, Christoffer & Protopapa, Marco, 2010. "Do bank loans and credit standards have an effect on output? A panel approach for the euro area," Working Paper Series 1150, European Central Bank.
- Vadym Volosovych & Bent E. Sørensen & Sebnem Kalemli-Ozcan, 2010.
"Deep Financial Integration and Volatility,"
2010 Meeting Papers
232, Society for Economic Dynamics.
- Sebnem Kalemli-Ozcan & Bent Sørensen & Vadym Volosovych, 2010. "Deep Financial Integration and Volatility," NBER Working Papers 15900, National Bureau of Economic Research, Inc.
- Sebnem Kalemli-Ozcan & Bent E. Sørensen & Vadym Volosovych, 2010. "Deep Financial Integration and Volatility," KoÃ§ University-TUSIAD Economic Research Forum Working Papers 1006, Koc University-TUSIAD Economic Research Forum, revised Apr 2010.
- Kalemli-Ozcan, Sebnem & Sorensen, Bent E & Volosovych, Vadym, 2010. "Deep Financial Integration and Volatility," CEPR Discussion Papers 7784, C.E.P.R. Discussion Papers.
- Fabio Ghironi & Viktors Stebunovs, 2010.
"The Domestic and International Effects of Interstate U.S. Banking,"
NBER Working Papers
16613, National Bureau of Economic Research, Inc.
- Fabio Ghironi & Viktors Stebunovs, 2010. "The Domestic and International Effects of Interstate U.S. Banking," Boston College Working Papers in Economics 765, Boston College Department of Economics.
- Ricardo Correa, 2008. "Bank integration and financial constraints: evidence from U.S. firms," International Finance Discussion Papers 925, Board of Governors of the Federal Reserve System (U.S.).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kris Vajs) The email address of this maintainer does not seem to be valid anymore. Please ask Kris Vajs to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.