What Drives Deregulation? The Economics and Politics of the Relaxation of Bank Branching Restrictions
Randall S. Kroszner
Booth School of Business, University of Chicago; National Bureau of Economic Research (NBER)
Philip E. Strahan
Boston College - Department of Finance; National Bureau of Economic Research (NBER)
CRSP Working Paper No. 460
This paper investigates private interest, public interest, and political-institutional theories of regulatory change to analyze state-level deregulation of bank branching restrictions. Using a hazard model, we find that interest group factors related to the relative strength of potential winners (large banks and small, bank-dependent firms) and losers (small banks and the rival insurance firms) can explain the timing of branching deregulation across states during the last quarter century. The same factors also explain congressional voting on interstate branching deregulation. While we find some support for each theory, the private interest approach provides the most compelling overall explanation of our results.
Number of Pages in PDF File: 44
JEL Classification: D78, G21, G28, L51
Date posted: August 21, 1999
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