Review of Finance Vol. 15 No. 1 2011
Finance and Efficiency: Do Bank Branching Regulations Matter?
Abstract
We document that the deregulation of bank branching restrictions in the United States triggered a reallocation across sectors, with end effects on state-level volatility. The change cannot be explained simply by shifts in sector-level returns and volatility. A reallocation effect is at play, which we study in the context of mean-variance portfolio theory applied to sectoral returns. We find the reallocation is particularly strong in sectors characterized by young, small and external finance dependent firms, and for states that have a larger share of such sectors. The findings suggest that improving bank access to branching affects the sectoral specialization of output, in a manner that depends on the variance-covariance properties of sectoral returns, rather than on their average only.
- DOI
- 10.1093/rof/rfq009
- Volume
- 15
- Issue
- 1
- Pages
- 135-172
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref