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The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition among Small and Large Banks Author info | Abstract | Publisher info | Download info | Related research | Statistics Nicholas Economides
R. Glenn Hubbard
Darius Palia
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This paper suggests that the introduction of bank branching restrictions and federal deposit insurance in the United States likely was motivated by political considerations. Specifically, we argue that these restrictions were instituted for the benefit of the small, unit banks that were unable to compete effectively with large, multi- unit banks. We analyze this 'political hypothesis' in two steps. First, we use a model of monopolistic competition between small and large banks to examine gains to the former group from the introduction of branching restrictions and government-sponsored deposit insurance. We then find strong evidence for the political hypothesis by examining the voting record of Congress.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5210.
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Date of creation: Dec 1996Date of revision:
Handle: RePEc:nbr:nberwo:5210Note: CF MEContact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Phone: 617-868-3900 Email: Web page: http://www.nber.org More information through EDIRC
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Article Paper Economides, N. & Hubbard, R.G. & Palia, D., 1995.
"The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition Among Small and Large Banks ,"
Papers
95-14, Columbia - Graduate School of Business.
Nicholas Economides & R. Glen Hubbard & Darius Palia, 1993.
"The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition Among Small and Large Banks ,"
Working Papers
93-23, New York University, Leonard N. Stern School of Business, Department of Economics.
Find related papers by JEL classification: G2 - Financial Economics - - Financial Institutions and Services L5 - Industrial Organization - - Regulation and Industrial Policy
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