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A spatial analysis of state banking regulation

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  • Thomas A. Garrett
  • Gary A. Wagner
  • David C. Wheelock

Abstract

We use a spatial model to investigate a state's choice of branch banking and interstate banking regimes as a function of the regime choices made by other states and other variables suggested in the literature. We extend the basic spatial econometric model by allowing spatial dependence to vary by geographic region. Our findings reveal that spatial effects have a large, statistically significant impact on state regulatory regime decisions. The importance of spatial correlation in the setting of state banking policies suggests the need to consider spatial effects in empirical models of state policies in general. Copyright RSAI 2005.

Suggested Citation

  • Thomas A. Garrett & Gary A. Wagner & David C. Wheelock, 2005. "A spatial analysis of state banking regulation," Papers in Regional Science, Wiley Blackwell, vol. 84(4), pages 575-595, November.
  • Handle: RePEc:bla:presci:v:84:y:2005:i:4:p:575-595
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    References listed on IDEAS

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    3. Abrams, Burton A & Settle, Russell F, 1993. "Pressure-Group Influence and Institutional Change: Branch-Banking Legislation during the Great Depression," Public Choice, Springer, vol. 77(4), pages 687-705, December.
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    6. Alm, James & McKee, Michael J. & Skidmore, Mark, 1993. "Fiscal Pressure, Tax Competition, and the Introduction of State Lotteries," National Tax Journal, National Tax Association, vol. 46(4), pages 463-76, December.
    7. Kenneth Spong, 2000. "Banking regulation : its purposes, implementation, and effects," Monograph, Federal Reserve Bank of Kansas City, number 2000bria, Jan 17.
    8. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
    9. Murdoch, James C. & Sandler, Todd & Vijverberg, Wim P. M., 2003. "The participation decision versus the level of participation in an environmental treaty: a spatial probit analysis," Journal of Public Economics, Elsevier, vol. 87(2), pages 337-362, February.
    10. Kane, Edward J, 1996. "De Jure Interstate Banking: Why Only Now?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 141-161, May.
    11. Anselin, Luc, 2002. "Under the hood : Issues in the specification and interpretation of spatial regression models," Agricultural Economics, Blackwell, vol. 27(3), pages 247-267, November.
    12. Philip E. Strahan, 2003. "The real effects of U.S. banking deregulation," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 111-128.
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    Cited by:

    1. Craig P. Aubuchon & David C. Wheelock, 2010. "The geographic distribution and characteristics of U.S. bank failures, 2007-2010: do bank failures still reflect local economic conditions?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 395-415.
    2. Cletus C. Coughlin & Thomas A. Garrett & Rubén Hernández-Murillo, 2006. "The geography, economics, and politics of lottery adoption," Review, Federal Reserve Bank of St. Louis, issue May, pages 165-180.
    3. David C. Wheelock, 2011. "Banking industry consolidation and market structure: impact of the financial crisis and recession," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 419-438.
    4. Thomas Garrett & Gary Wagner & David Wheelock, 2007. "Regional disparities in the spatial correlation of state income growth, 1977–2002," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(3), pages 601-618, September.
    5. George Crowley, 2012. "Spatial dependence in constitutional constraints: the case of US states," Constitutional Political Economy, Springer, vol. 23(2), pages 134-165, June.
    6. Huang, Rocco, 2007. "Evaluating the real effect of bank branching deregulation: comparing contiguous counties across U.S. state borders," Working Paper Series 788, European Central Bank.
    7. Belasen, Ariel R. & Hafer, R.W., 2013. "Do Changes in Economic Freedom affect Well-Being?," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 43(1).
    8. Thomas A. Garrett & Gary A. Wagner & David C. Wheelock, 2005. "Regional disparities in the spatial correlation of state income growth," Working Papers 2005-061, Federal Reserve Bank of St. Louis.

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