What Drives Deregulation? The Economics and Politics of the Relaxation of Bank Branching Restrictions

44 Pages Posted: 21 Aug 1999  

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)

Multiple version iconThere are 2 versions of this paper

Date Written: December 1998

Abstract

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.

JEL Classification: D78, G21, G28, L51

Suggested Citation

Kroszner, Randall S. and Strahan, Philip E., What Drives Deregulation? The Economics and Politics of the Relaxation of Bank Branching Restrictions (December 1998). CRSP Working Paper No. 460. Available at SSRN: https://ssrn.com/abstract=170355 or http://dx.doi.org/10.2139/ssrn.170355

Randall S. Kroszner (Contact Author)

Booth School of Business, University of Chicago ( email )

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HOME PAGE: http://gsbwww.uchicago.edu/fac/randall.kroszner/re

National Bureau of Economic Research (NBER)

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Philip E. Strahan

Boston College - Department of Finance ( email )

Carroll School of Management
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United States
617-552-6430 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://www2.bc.edu/~strahan

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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