47 Pages Posted: 12 Jun 2009 Last revised: 8 Feb 2010
Date Written: December 22, 2009
We assess the impact of bank deregulation on the distribution of income in the United States. From the 1970s through the 1990s, most states removed restrictions on intrastate branching, which intensified bank competition and improved bank performance. Exploiting the cross-state, cross-time variation in the timing of branch deregulation, we find that deregulation materially tightened the distribution of income by boosting incomes in the lower part of the income distribution while having little impact on incomes above the median. Bank deregulation tightened the distribution of income by increasing the relative wage rates and working hours of unskilled workers.
Keywords: Financial Institutions, Government Policy and Regulation, Income Inequality
JEL Classification: G28, G21, D31
Suggested Citation: Suggested Citation
Beck, Thorsten and Levine, Ross and Levkov, Alexey, Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States (December 22, 2009). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1415502