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Legal forms and regulatory responses: a comparative analysis of S and C corporation community banks

Author

Listed:
  • Shi Qi

    (William and Mary)

  • Sepideh Raei

    (Utah State University)

Abstract

This study investigates the differential responses of Subchapter S and C corporation banks within the U.S. community banking sector to significant policy changes following the 2007–2008 financial crisis. Using bank-level data from 2003 to 2019 and employing a difference-in-differences analysis, we explore how legal forms influence banks’ yields on earning assets and funding costs. Our findings reveal that S banks, due to their unique tax status and capital access limitations, exhibited more pronounced reductions in asset yields and increased funding costs compared to C banks.

Suggested Citation

  • Shi Qi & Sepideh Raei, 2025. "Legal forms and regulatory responses: a comparative analysis of S and C corporation community banks," Economics of Governance, Springer, vol. 26(4), pages 559-590, December.
    • Handle: RePEc:spr:ecogov:v:26:y:2025:i:4:d:10.1007_s10101-025-00339-x
    DOI: 10.1007/s10101-025-00339-x
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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