The Motivations Behind Banking Reform

6 Pages Posted: 29 Aug 2001

See all articles by Randall Kroszner

Randall Kroszner

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)


In the past few decades, most state legislatures fundamentally reformed and deregulated the banking industry by adopting new laws on branching and other banking activities. Because those efforts took place on a state-by-state basis, the reforms offer a rich laboratory in which to investigate what drives deregulation. Did banking deregulation happen first in states in which people would most benefit from reform, or in states in which well-organized political groups had the most to gain from deregulation? The author's analysis of branching deregulation suggests the latter explanation, known as the private interest theory of government action, best accounts for the pattern of banking reform that unfolded in the last 30 years.

Suggested Citation

Kroszner, Randall, The Motivations Behind Banking Reform. Available at SSRN: or

Randall Kroszner (Contact Author)

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