Banking Deregulation and Credit Supply: Distinguishing the Balance Sheet and the Competition Channels

51 Pages Posted: 16 May 2014 Last revised: 19 Aug 2017

See all articles by Yongqiang Chu

Yongqiang Chu

Belk College of Business, UNC Charlotte

Date Written: August 1, 2017

Abstract

This paper studies how interstate banking deregulation affects credit supply, focusing on distinguishing the balance sheet and bank competition channels. Using a regression discontinuity design, I find that interstate banking deregulation affects credit supply, not only by legally impacted commercial banks, but also by non-legally impacted non-bank lenders. Controlling for lender-year fixed effects to isolate the balance sheet effect, I find that credit supply by the same lender varies with interstate banking restrictions in different states. Overall, the results suggest that the impact of interstate banking deregulation is mostly driven by the bank competition channel.

Keywords: Banking Competition, Interstate Banking Deregulation, Commercial Real Estate, Regression Discontinuity Design

Suggested Citation

Chu, Yongqiang, Banking Deregulation and Credit Supply: Distinguishing the Balance Sheet and the Competition Channels (August 1, 2017). Available at SSRN: https://ssrn.com/abstract=2437089 or http://dx.doi.org/10.2139/ssrn.2437089

Yongqiang Chu (Contact Author)

Belk College of Business, UNC Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States
7046877695 (Phone)

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