Deregulation, Intensity of Competition, Industry Evolution and the Productivity Growth of US Commercial Banks
32 Pages Posted: 30 Nov 2003 Last revised: 18 Nov 2007
This paper studies the influence of the evolution in intrastate and interstate deregulations on the total factor productivity growth of the US commercial banking sector for the 1971-1995 period. We consider intrastate branching, intrastate multibank holding company (MBHC), interstate multibank holding company, and interstate multibank holding company de novo branching deregulations. Results indicate that long-standing banking restrictions affected negatively banks' productivity growth and that relaxing restrictions on intrastate branching expansion has a positive long-run influence upon banks' productivity growth. The effect of interstate MBHC deregulations on banks' productivity growth is largely short-run and arises from regional reciprocity agreements. Interstate MBHC de novo branching deregulations have a negative long-run effect on banks' productivity growth.
Keywords: Total Factor Productivity Growth, MBHC Regulations, Bank Regulations
JEL Classification: D24, C23, E44, G21, G28, K23
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