 Banking Regulatory Constraints and Personal Bankruptcy Filings in the USChintal A Desai and David H Downs Journal of Financial Regulation, 2022, vol. 8, issue 1, 75-103 Abstract: The economic well-being of a household depends on its access to credit and also its access to a legal system for managing over-indebtedness. Our hypothesis is that the removal of regulatory constraints on a bank’s ability to expand in new geographic markets increases households’ access to credit, which in turn, contributes to a rise in consumer defaults. In the US, we find a net increase in Chapter 13 bankruptcies following a loosening of a state’s restrictions on multi-branch banking, compared to the increase in Chapter 13 bankruptcies in states that did not change their banking rules. The increased mortgage lending after branch deregulation helps explain this rise in Chapter 13 filings, suggesting that homeowners use the Chapter 13 code to save their houses. Further, the effects of the mortgage supply channel are greater in areas with low bank concentration. Overall, our findings are relevant to policymakers in their efforts to either set up a new personal insolvency regime or modify the existing bankruptcy process. Keywords: Bank deregulation; Personal bankruptcy; Intrastate branching; Difference-in-difference (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:refreg:v:8:y:2022:i:1:p:75-103. Access Statistics for this article Journal of Financial Regulation is currently edited by Dan Awrey, Geneviève Helleringer and Wolf-Georg Ringe More articles in Journal of Financial Regulation from Oxford University Press |
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