Banking regulation, regulatory capture and inequality

G. P. Manish and Colin O’Reilly ()
Additional contact information
G. P. Manish: Troy University
Colin O’Reilly: Creighton University
Authors registered in the RePEc Author Service: Colin W. O'Reilly

Public Choice, 2019, vol. 180, issue 1, No 9, 145-164

Abstract: Abstract Regulation of the banking and finance industry may lead to a more equal distribution of income if regulators pursue goals in the public interest. Alternatively, the economic theory of regulation predicts that regulatory and supervisory processes may be captured by the banking industry, leading to policies that promote the industry’s interests. The liberalization of the banking and finance sector since the 1980s has produced more intense banking supervision and prudential regulation. In this study we find that banking supervision regulation is associated with greater income inequality. These findings are consistent with the economic theory of regulation. We interpret these results as evidence that regulatory capture in the banking and finance industry can have pernicious effects on the distribution of income.

Keywords: Regulation; Inequality; Regressive; Regulatory capture; Liberalization; Banking supervision (search for similar items in EconPapers)
JEL-codes: D31 D63 D72 D73 F65 L51 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:180:y:2019:i:1:d:10.1007_s11127-018-0501-0

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DOI: 10.1007/s11127-018-0501-0

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