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https://ssrn.com/abstract=2225526
 
 

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Banking Deregulation and Innovation


Sudheer Chava


Georgia Institute of Technology - Scheller College of Business

Alexander Oettl


Georgia Institute of Technology - Strategic Management Area

Ajay Subramanian


Georgia State University

Krishnamurthy Subramanian


Indian School of Business (ISB), Hyderabad

February 22, 2013

Journal of Financial Economics (JFE), Forthcoming

Abstract:     
We document empirical support for a key micro-level channel --- innovation by young, private firms --- through which financial sector deregulation affects economic growth. We find that intrastate banking deregulation, which increased the local market power of banks, decreased the level and risk of innovation by young, private firms. In contrast, interstate banking deregulation, which decreased the local market power of banks, increased the level and risk of innovation by young, private firms. These contrasting effects on innovation also translated into contrasting effects on economic growth. Our study suggests that the nature of financial sector deregulation crucially affects its potential benefits to the real economy.

Number of Pages in PDF File: 28

Keywords: banking, innovation, growth, young firms, private firms

JEL Classification: G28, L43, O31, O43, K23


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Date posted: February 27, 2013 ; Last revised: October 29, 2015

Suggested Citation

Chava, Sudheer and Oettl, Alexander and Subramanian, Ajay and Subramanian, Krishnamurthy, Banking Deregulation and Innovation (February 22, 2013). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2225526

Contact Information

Sudheer Chava
Georgia Institute of Technology - Scheller College of Business ( email )
800 West Peachtree St.
Atlanta, GA 30308
United States
HOME PAGE: http://www.prism.gatech.edu/~schava6/

Alexander Oettl (Contact Author)
Georgia Institute of Technology - Strategic Management Area ( email )
Atlanta, GA 30332
United States

Ajay Subramanian
Georgia State University ( email )
Depts. of Finance & Risk Management and Insurance
P.O. Box 4050
Atlanta, GA 30303
United States
404-413-7483 (Phone)
HOME PAGE: http://robinson.gsu.edu/profile/ajay-subramanian/
Krishnamurthy Subramanian
Indian School of Business (ISB), Hyderabad ( email )
Hyderabad, Gachibowli 500 019
India

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