The Finance-Growth Nexus: Evidence from Bank Branch Deregulation
Philip E. Strahan
Boston College - Department of Finance; National Bureau of Economic Research (NBER)
QUARTERLY J. OF ECONOMICS, August 1996
This paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the U.S. We find that the rates of real, per-capita growth in income and output increase significantly following intrastate branch reform. We also argue that the observed changes in growth are the result of changes in the banking system. Improvements in the quality of bank lending, not increased volume of bank lending, appear to be responsible for faster growth.
JEL Classification: G2, O4Accepted Paper Series
Date posted: September 17, 1996
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