Financial Integration and Credit Democratization: Linking Banking Deregulation to Economic Growth
65 Pages Posted: 2 Sep 2012 Last revised: 13 Jan 2020
Date Written: January 10, 2020
We use a matching method that constructs synthetic counterfactual states to identify the channels that link bank deregulation to financial integration, and thereby to economic growth. We document a positive, but conditional, effect of financial integration on economic growth. We explore the heterogeneous effects of financial integration across states depending on the capital mobility in each state. Our results reveal a correlation between financial integration and subsequent banking sector changes related to an expansion in loan recipients. We show that financial integration democratizes lending and spurs economic growth.
Suggested Citation: Suggested Citation