Credit Constraints and Demand for Higher Education: Evidence from Financial Deregulation

Stephen Teng Sun and Constantine Yannelis
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Stephen Teng Sun: Guanghua School of Management, Peking University

The Review of Economics and Statistics, 2016, vol. 98, issue 1, 12-24

Abstract: We use staggered banking deregulation across states in the United States to examine the impact of the resulting increased credit supply on college enrollment from the 1970s to the early 1990s. Our research design produces estimates that are not confounded by wealth effects due to changes in income or housing wealth. We find that lifting banking restrictions raises college enrollment by about 2.6 percentage points (4.9%). We rule out alternative interpretations by examining results for different income groups and bankrupt households. We also find similar effects for two-year or four-year college completion and supporting evidence in household educational borrowing.

JEL-codes: G21 G38 H52 H81 I22 I28 J24 J3 J38 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (47)

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Working Paper: Credit Constraints and Demand for Higher Education: Evidence from Financial Deregulation (2013)
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