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Financial integration and credit democratization: Linking banking deregulation to economic growth

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  • Berger, Elizabeth A.
  • Butler, Alexander W.
  • Hu, Edwin
  • Zekhnini, Morad

Abstract

We use a matching method that constructs synthetic counterfactual states to identify the channels that link bank deregulation to financial integration, and thereby to economic growth. We document a positive, but conditional, effect of financial integration on economic growth. We explore the heterogeneous effects of financial integration across states depending on the capital mobility in each state. Our results reveal a correlation between financial integration and subsequent banking sector changes related to an expansion in loan recipients. We show that financial integration democratizes lending and spurs economic growth.

Suggested Citation

  • Berger, Elizabeth A. & Butler, Alexander W. & Hu, Edwin & Zekhnini, Morad, 2021. "Financial integration and credit democratization: Linking banking deregulation to economic growth," Journal of Financial Intermediation, Elsevier, vol. 45(C).
  • Handle: RePEc:eee:jfinin:v:45:y:2021:i:c:s1042957320300115
    DOI: 10.1016/j.jfi.2020.100857
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    3. Lucas Avezum, 2021. "Assessment of the effectiveness of the macroprudential measures implemented in the context of the Covid-19 pandemic," Working Papers w202107, Banco de Portugal, Economics and Research Department.
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    5. Hasman, Augusto & Samartín, Margarita, 2023. "Government intervention, linkages and financial fragility," Economic Modelling, Elsevier, vol. 126(C).
    6. Rudkin, Wanling & Cai, Charlie X., 2023. "Information content of sustainability index recomposition: A synthetic portfolio approach," International Review of Financial Analysis, Elsevier, vol. 88(C).

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