The Real Effects of U.S. Banking Deregulation

摘要: JULY/AUGUST 2003 111 I n the 1970s, commercial banks in United States faced restrictions on interest rates, both deposit and lending sides of their business. They were restricted for most part to classic financial intermediation—deposit-taking lending—to exclusion, example, underwriting many corporate securities insurance products. And limited geographical scope operations. No state permitted headquartered other states either open branches or buy banks, prohibited intrastate branching. Today, almost all these have been lifted: Interest rate ceilings deposits phased out early 1980s; usury laws weakened because may now lend anywhere; limits banks’ ability engage activities completely eliminated, as banking. As a result, our banking system is more competitive consolidated than ever— vertically horizontally. This paper focuses how one dimension this broad-based deregulation—the removal bank entry expansion—affected economic performance. In nutshell, results suggest that regulatory change was followed by better performance real economy. State economies grew faster had higher rates new business formation after deregulation. At same time, macroeconomic stability improved. By opening up markets allowing integrate across nation, deregulation made local less sensitive fortunes banks. First, explain relaxation expansion proceeded historically why somewhat unusual history state-level regulation presents an attractive setting study affects then present evidence led substantial beneficial effects The findings are important at least two reasons. they demonstrate tight link between “Wall Street” “Main Street.” Finance not only affected industrial sector, but reverse holds true well. mutual dependence highlights importance here but, perhaps even critically, emerging without welldeveloped set institutions. Second, support idea competition openness beneficial. finding accepted when applied firms—for economists, free trade akin motherhood—but it much sector.