Entrepreneurship and the Deregulation of Banking: How Strong is the Evidence?
Federal Reserve Bank of St. Louis Working Paper No. 2002-032A
15 Pages Posted: 3 Apr 2003
Date Written: December 2002
This paper demonstrates that recent results suggesting a positive relationship between banking deregulation and entrepreneurship are very sensitive to estimation assumptions. When heteroskedasticity and autocorrelation are corrected for, branching deregulation is shown to have no effect and the estimated effect of interstate banking deregulation is reduced by nearly two thirds. When the effects of deregulation are allowed to differ across regions, deregulation of either type is negatively associated with entrepreneurship in some regions, and positively associated in others.
Keywords: Entrepreneurship, banking deregulation
JEL Classification: G28, R12
Suggested Citation: Suggested Citation