The Real Effects of Bank Branch Deregulation at Various Stages of Economic Development: The European Experience

43 Pages Posted: 22 Aug 2011

See all articles by José Manuel Pastor

José Manuel Pastor

University of Valencia; Universidad de Alicante - Valencian Institute of Economic Studies

Lorenzo Serrano

University of Valencia; Universidad de Alicante - Valencian Institute of Economic Studies

Emili Tortosa-Ausina

Jaume I University - Department of Economics

Date Written: August 22, 2011

Abstract

This paper provides evidence on the links between financial deregulation and economic performance in a European context. Specifically, we study the relaxation of bank branching restrictions in Spain which triggered off a remarkable inter-regional expansion of savings banks which was coincidental with an unprecedented period of sustained growth. Although related questions have been largely investigated for the US, the European experiences remain largely unexplored. An additional contribution is the use of quantile regression techniques which, unlike traditional OLS regression analysis, do not focus on the “average effect for the average province”. This change of focus helps to overcome the difficulties found by previous studies in identifying any strong link between financial deregulation and growth. We also extend the analysis to other measures of economic activity, not only per capita income but also labor productivity and capital intensity. Our main findings indicate that, should bank inter-regional branch deregulation have any positive effect, the most benefited provinces would be the least developed ones.

Keywords: bank, branches, growth, province, quantile regression

JEL Classification: D40, L11, G21, C25

Suggested Citation

Pastor, José Manuel and Serrano, Lorenzo and Tortosa-Ausina, Emili, The Real Effects of Bank Branch Deregulation at Various Stages of Economic Development: The European Experience (August 22, 2011). Available at SSRN: https://ssrn.com/abstract=1914429 or http://dx.doi.org/10.2139/ssrn.1914429

José Manuel Pastor

University of Valencia

Avda. de los Naranjos s/n
Valencia, Valencia E-46022
Spain

Universidad de Alicante - Valencian Institute of Economic Studies

03071 Alicante, sn 46022 E
Spain

Lorenzo Serrano

University of Valencia ( email )

Avda. de los Naranjos s/n
Valencia, Valencia E-46022
Spain

Universidad de Alicante - Valencian Institute of Economic Studies

03071 Alicante, sn 46022 E
Spain

Emili Tortosa-Ausina (Contact Author)

Jaume I University - Department of Economics ( email )

Campus del Riu Sec.
E-12071 Castellon
Spain

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