Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution

Policymakers and economists disagree about the impact of bank regulations on the distribution of income. Exploiting cross-state and cross-time variation, the authors test whether liberalizing restrictions on intra-state branching in the United Sta...

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Bibliographic Details
Main Authors:	Beck, Thorsten, Levine, Ross, Levkov, Alexey
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ADVERSE EFFECTS AGGREGATE GROWTH ATMS AVERAGE INCOME AVERAGE WAGE BANK BRANCH BANK BRANCHES BANK CREDIT BANK LOAN BANK LOANS BANK REGULATIONS BANKING INDUSTRY BANKING SECTOR DEVELOPMENT BANKING SERVICES BANKING SYSTEMS BOND BORROWING BUSINESS CYCLES BUSINESS SCHOOL CAPITAL ACCUMULATION CAPITAL MARKET CENTRAL BANK CIVIL WAR COLLATERAL COLLATERAL REQUIREMENTS COLLEGE DEGREE COMMERCIAL BANKING COMMUNICATIONS TECHNOLOGY CONFIDENTIALITY CONTRIBUTION CREDIT AVAILABILITY CREDIT CARD CREDIT MARKET CREDIT MARKET IMPERFECTIONS CROSS-COUNTRY ANALYSES DECOMPOSITION TECHNIQUES DEMOCRATIC SOCIETIES DEMOGRAPHIC DEPENDENT VARIABLE DEREGULATION DESCRIPTIVE STATISTICS DEVELOPING ECONOMIES DIFFERENTIAL IMPACT DIRECT ACCESS DISTRIBUTION OF INCOME DISTRIBUTIONAL CHANGES DISTRIBUTIONAL EFFECTS DIVIDENDS EARNINGS EARNINGS INEQUALITY EARNINGS OF WOMEN ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC THEORY ECONOMY LITERATURE EMPIRICAL EVIDENCE EMPIRICAL FINDINGS EMPIRICAL SUPPORT FAMILY INCOME FEDERAL RESERVE FEDERAL RESERVE BANK FEMALE WORKERS FINANCIAL COMPANIES FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL LIBERALIZATION FINANCIAL MARKET FINANCIAL REFORMS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SERVICES FINANCIAL SYSTEMS FIXED COSTS GINI COEFFICIENT GLOBALIZATION GOVERNMENT EXPENDITURES GROWTH RATE GROWTH THEORIES HIGH COST HOLDING COMPANIES HOLDING COMPANY HUMAN CAPITAL INCENTIVE EFFECTS INCOME INCOME DATA INCOME DIFFERENCES INCOME DISTRIBUTION INCOME DISTRIBUTION DATA INCOME GROWTH INCOME INEQUALITY INCOME INEQUALITY DATA INCOME REDISTRIBUTION INCOMES INEQUALITY MEASURES INSURANCE INSURANCE PRODUCTS INTEREST PAYMENTS INTEREST RATE LABOR FORCE LABOR MARKET LAGGED GROWTH LARGE BANK LARGE BANKS LARGE FIRMS LIBERALIZATION LOCAL BANK LOCAL BANKS LORENZ CURVE LOWER INCOME MACROECONOMICS MARKET CONDITIONS MARKET IMPERFECTIONS MARKET STRUCTURE MARRIED WOMEN MEASUREMENT ERROR MERGERS MONETARY ECONOMICS MONEY MARKET MONEY MARKET MUTUAL FUNDS MONOPOLIES MONOPOLY MUTUAL FUNDS NATURAL LOGARITHM NATURAL MONOPOLY NEGATIVE EFFECT NEGATIVE IMPACT PER CAPITA GROWTH PER CAPITA INCOME PERSONAL INCOME POLICY CHANGE POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTITUTIONS POLITICAL POWER POSITIVE EFFECT POSITIVE IMPACT PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCT MARKET REDISTRIBUTION POLICIES REGIONAL DUMMIES REGRESSION RESULTS REGULATORY RESTRICTIONS RELATIVE INCOME RELATIVE INCOMES RELATIVE WAGES RENTS RESEARCH ASSISTANCE SALARY SELF-EMPLOYMENT SIGNIFICANT EFFECT SIGNIFICANT RELATIONSHIP SKILL PREMIUM SKILLED WORKERS SMALL BUSINESS SMALL BUSINESSES SOCIAL COSTS SOURCES OF INCOME STATE BANK STATE UNIVERSITY TAX TAXATION TERMINATION UNEMPLOYMENT UNEMPLOYMENT RATE UNSKILLED WORKERS VALUE ADDED VOLATILITY WAGE WAGE RATES WAGES WORLD ECONOMIES
Online Access:	http://documents.worldbank.org/curated/en/2007/08/8179660/big-bad-banks-impact-branch-deregulation-income-distribution http://hdl.handle.net/10986/7283

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Summary:	Policymakers and economists disagree about the impact of bank regulations on the distribution of income. Exploiting cross-state and cross-time variation, the authors test whether liberalizing restrictions on intra-state branching in the United States intensified, ameliorated, or had no effect on income distribution. The analysis finds that branch deregulation lowered income inequality by affecting labor market conditions, not by boosting the business income of the poor, nor by enhancing educational attainment. Reductions in the earnings gap between men and women and between skilled and unskilled workers account for the bulk of the explained drop in income inequality.

Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution

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