US Banking Deregulation and Local Economic Growth: Direct Effects and Externalities

57 Pages Posted: 1 Nov 2019

See all articles by Pieter IJtsma

Pieter IJtsma

University of Groningen

Sherrill Shaffer

University of Wyoming

Laura Spierdijk

University of Groningen

Date Written: October 30, 2019

Abstract

This study investigates the effects of banking deregulation on county-level economic growth in the U.S. during the 1970–2000 period. Our main contribution to the literature is that we analyze both the direct and external effects of banking deregulation on local economic growth. For the regions South, West and Northeast, we find significantly positive long-run direct effects of intrastate branching deregulation on the expected growth rates of counties in the deregulated state itself, up to several percentage points. We also establish significantly positive long-run external effects on the expected growth rates of counties adjacent to the deregulated state, up to several tenths of percentage points. We do not find such robust effects for interstate banking deregulation.

Keywords: U.S. banking deregulation, economic growth, externalities

JEL Classification: G21, G28

Suggested Citation

IJtsma, Pieter and Shaffer, Sherrill and Spierdijk, Laura, US Banking Deregulation and Local Economic Growth: Direct Effects and Externalities (October 30, 2019). CAMA Working Paper No. 80/2019. Available at SSRN: https://ssrn.com/abstract=3477639

Pieter IJtsma

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Sherrill Shaffer (Contact Author)

University of Wyoming ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-2173 (Phone)
307-766-5090 (Fax)

Laura Spierdijk

University of Groningen ( email )

PO Box 800
Groningen, 9700 AV
Netherlands

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