Capital Mobility and Regulation Frictions: Evidence from U.S. Lottery Winners

66 Pages Posted: 2 Dec 2015 Last revised: 13 Apr 2022

See all articles by Carlos Parra

Carlos Parra

Pontificia Universidad Católica de Chile - School of Business

Date Written: April 12, 2022

Abstract

Despite the banking deregulation that lifted restrictions on bank expansion across state lines, I find that state borders are still relevant for credit allocation in the United States. Using a new source of quasi-experimental variation in bank funding from lottery winners, I show that small business lending mostly increases in the state where the shock occurs. Results are not explained by local demand or bank charter type and are robust to comparing contiguous CBSA pairs across state borders. Consistent with part of the banking regulation reducing capital mobility, the effects are more pronounced for banks for which the regulation binds.

Keywords: Financial Integration, Banking Regulation, Policy Distortions

JEL Classification: G21, G28, G32

Suggested Citation

Parra, Carlos, Capital Mobility and Regulation Frictions: Evidence from U.S. Lottery Winners (April 12, 2022). Available at SSRN: https://ssrn.com/abstract=2696283 or http://dx.doi.org/10.2139/ssrn.2696283

Carlos Parra (Contact Author)

Pontificia Universidad Católica de Chile - School of Business ( email )

Vicuna Mackenna 4860
Santiago
Chile

HOME PAGE: http://www.carlosrparra.com/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
491
Abstract Views
3,739
rank
85,619
PlumX Metrics