Bank entry regulation and financial development: The US free banking experience

Ager, Philipp ; Spargoli, Fabrizio

URL: https://131b71d2-d72e-a4b8-5bd5-ef4ebb97577e.files...
Document Type: Working paper
Year of publication: 2016
Place of publication: Odense
Publication language: English
Institution: School of Law and Economics > VWL, Angewandte Makroökonomik (Ager 2021-)
Subject: 330 Economics
Keywords (English): bank deregulation , bank competition , economic growth , financial development , dynamic efficiency , free banking
Abstract: We examine how the relaxation of barriers to bank entry affects financial development by exploiting the introduction of free banking laws in US states during 1830-1860, a period when regulatory barriers to bank exit were more limited than today. Free banking laws led to an expansion of the banking sector. Further evidence on the exit probability and growth of incumbent banks, as well as the higher growth of industries for which external finance is presumably more relevant, reveal improvements in allocative efficiency. Our findings highlight the importance of both entry and exit barriers in the process of selection among banks.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.

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