Regulatory Competition and Cross-Fertilization in the US Banking Markets: A Tiebout Extension and Empirical Evidence

41 Pages Posted: 17 Aug 2014 Last revised: 2 May 2020

See all articles by Dogan Tirtiroglu

Dogan Tirtiroglu

Kadir Has University

Başak Tanyeri

Bilkent University

Ercan Tirtiroglu

University of Adelaide - Business School

Kenneth N. Daniels

Daniels Foundation for Impact Investments and Development

Date Written: August 15, 2014

Abstract

We incorporate arguments from the Tiebout model into the regulatory competition equilibrium and study cross-fertilization in the productivity growth of banks between those in a state and others in this state’s neighboring states. Empirically, we focus on two time periods: before (i.e., 1971-1977) and during (i.e., 1982-1995) the interstate multi bank holding company (IMBHC) deregulations, upon which, cross-border bank M&As, mainly among neighboring states, could enhance cross-fertilization by injecting new blood and awakening the market for corporate control. Results show that cross-fertilization in bank performance, observed among neighboring states before the IMBHC deregulations, gets stronger upon implementing these deregulations.

Keywords: Spatial interaction, Tiebout Model, Bank deregulations, Commercial banks, Productivity growth, Kalman Filter

JEL Classification: G21, G28, G34, K23, D24, C23, R12

Suggested Citation

Tirtiroglu, Dogan and Tanyeri, Başak and Tirtiroglu, Ercan and Daniels, Kenneth N., Regulatory Competition and Cross-Fertilization in the US Banking Markets: A Tiebout Extension and Empirical Evidence (August 15, 2014). Available at SSRN: https://ssrn.com/abstract=2480960 or http://dx.doi.org/10.2139/ssrn.2480960

Dogan Tirtiroglu (Contact Author)

Kadir Has University ( email )

Istanbul
Turkey

Başak Tanyeri

Bilkent University ( email )

06533 Bilkent, Ankara
Turkey
903122901871 (Phone)

HOME PAGE: http://www.bilkent.edu.tr/~basak

Ercan Tirtiroglu

University of Adelaide - Business School ( email )

10 Pulteney Street
Adelaide, South Australia 5005
Australia

Kenneth N. Daniels

Daniels Foundation for Impact Investments and Development ( email )

New Jersey, NJ 07018
United States

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