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Journal of Finance Vol. 65 No. 5 2010

Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States

Thorsten Beck1,2,3,4,5,6; Ross Levine1,2,3,4,5,6; Alexey Levkov1,2,3,4,5,6

1 Goethe University Frankfurt · 2 Center for Economic and Policy Research · 3 International Monetary Fund · 4 Federal Reserve · 5 Tilburg University · 6 University of Virginia

Abstract

We assess the impact of bank deregulation on the distribution of income in the United States. From the 1970s through the 1990s, most states removed restrictions on intrastate branching, which intensified bank competition and improved bank performance. Exploiting the cross‐state, cross‐time variation in the timing of branch deregulation, we find that deregulation materially tightened the distribution of income by boosting incomes in the lower part of the income distribution while having little impact on incomes above the median. Bank deregulation tightened the distribution of income by increasing the relative wage rates and working hours of unskilled workers.

DOI
10.1111/j.1540-6261.2010.01589.x
Volume
65
Issue
5
Pages
1637-1667
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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