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Big bad banks ? the impact of U.S. branch deregulation on income distribution

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  • Beck, Thorsten
  • Levine, Ross
  • Levkov, Alexey

Abstract

Policymakers and economists disagree about the impact of bank regulations on the distribution of income. Exploiting cross-state and cross-time variation, the authors test whether liberalizing restrictions on intra-state branching in the United States intensified, ameliorated, or had no effect on income distribution. The analysis finds that branch deregulation lowered income inequality by affecting labor market conditions, not by boosting the business income of the poor, nor by enhancing educational attainment. Reductions in the earnings gap between men and women and between skilled and unskilled workers account for the bulk of the explained drop in income inequality.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4330.

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Date of creation: 01 Aug 2007
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Handle: RePEc:wbk:wbrwps:4330

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Keywords: Emerging Markets; Economic Theory&Research; Inequality; Fiscal&Monetary Policy;

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Citations

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Cited by:
  1. Asli Demirg��-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 287-318, November.
  2. Martin Strieborny & Madina Kukenova, 2011. "Investment in Relationship-Specific Assets: Does Finance Matter?," CESifo Working Paper Series 3349, CESifo Group Munich.
  3. Ghosh, Saibal, 2008. "Financial Inclusion and Financial Fragility: An Empirical Note," MPRA Paper 24252, University Library of Munich, Germany.
  4. Stelios Michalopoulos & Luc Laeven & Ross Levine, 2011. "Financial Innovation and Endogenous Growth," Economics Working Papers 0097, Institute for Advanced Study, School of Social Science.
  5. Graafland, J.J. & Ven, B.W. van de, 2011. "The Credit Crisis and The Moral Responsibility of Professionals in Finance," Discussion Paper 2011-048, Tilburg University, Center for Economic Research.
  6. Miriam Bruhn & Inessa Love, 2011. "Gender differences in the impact of banking services: evidence from Mexico," Small Business Economics, Springer, vol. 37(4), pages 493-512, November.
  7. Bruhn, Miriam & Love, Inessa, 2009. "The economic impact of banking the unbanked : evidence from Mexico," Policy Research Working Paper Series 4981, The World Bank.
  8. Demirguc-Kunt, Asli & Levine, Ross, 2008. "Finance and economic opportunity," Policy Research Working Paper Series 4468, The World Bank.
  9. Kpodar, Kangni & Singh, Raju Jan, 2011. "Does financial structure matter for poverty ? evidence from developing countries," Policy Research Working Paper Series 5915, The World Bank.
  10. Kim, Dong-Hyeon & Lin, Shu-Chin, 2011. "Nonlinearity in the financial development–income inequality nexus," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 310-325, September.

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