Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution

41 Pages Posted: 16 Aug 2007

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Alexey Levkov

Brown University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2007

Abstract

By studying intrastate branch banking reform in the United States, this paper provides evidence that financial markets substantively influence the distribution of income. From the 1970s through the 1990s, most states removed restrictions on intrastate branching, which intensified bank competition and improved efficiency. Exploiting the cross-state, cross-time variation in the timing of bank deregulation, we evaluate the impact of liberalizing intrastate branching restrictions on the distribution of income. We find that branch deregulation significantly reduced income inequality by boosting the incomes of lower income workers. The reduction in income inequality is fully accounted for by a reduction in earnings inequality among salaried workers.

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Suggested Citation

Beck, Thorsten and Levine, Ross Eric and Levkov, Alexey, Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution (August 2007). NBER Working Paper Series, Vol. w13299, pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1007194

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alexey Levkov

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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