Financial Integration and Credit Democratization: Linking Banking Deregulation to Economic Growth

65 Pages Posted: 2 Sep 2012 Last revised: 13 Jan 2020

See all articles by Elizabeth Berger

Elizabeth Berger

University of Houston; Cornell University

Alexander W. Butler

Rice University - Jesse H. Jones Graduate School of Business

Edwin Hu

New York University School of Law

Morad Zekhnini

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Date Written: January 10, 2020

Abstract

We use a matching method that constructs synthetic counterfactual states to identify the channels that link bank deregulation to financial integration, and thereby to economic growth. We document a positive, but conditional, effect of financial integration on economic growth. We explore the heterogeneous effects of financial integration across states depending on the capital mobility in each state. Our results reveal a correlation between financial integration and subsequent banking sector changes related to an expansion in loan recipients. We show that financial integration democratizes lending and spurs economic growth.

Suggested Citation

Berger, Elizabeth and Butler, Alexander W. and Hu, Edwin and Zekhnini, Morad, Financial Integration and Credit Democratization: Linking Banking Deregulation to Economic Growth (January 10, 2020). Available at SSRN: https://ssrn.com/abstract=2139679 or http://dx.doi.org/10.2139/ssrn.2139679

Elizabeth Berger

University of Houston ( email )

Houston, TX 77204
United States

Cornell University ( email )

Ithaca, NY 14853
United States

Alexander W. Butler (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

MS 531
Houston, TX 77005
United States
713-348-6341 (Phone)

HOME PAGE: http://www.owlnet.rice.edu/~awbutler/

Edwin Hu

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Morad Zekhnini

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

East Lansing, MI 48824-1121
United States

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