 The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition among Small and Large BanksNicholas Economides (), Robert Hubbard and Darius Palia Journal of Law and Economics, 1996, vol. 39, issue 2, 667-704 Abstract: This article suggests that the introduction of bank branching restrictions and federal deposit insurance in the United States likely was motivated by political considerations. Specifically, we argue that these restrictions are instituted for the benefit of the small unit banks that were unable to compete effectively with large, multiunit banks. We analyze this "political hypothesis" in two steps. First, we use a model of monopolistic competition between small and large banks to examine gains to the former group from the introduction of branching restrictions and government-sponsored deposit insurance. We then find strong evidence for the political hypothesis by examining the voting record of Congress. Copyright 1996 by the University of Chicago. Date: 1996 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:v:39:y:1996:i:2:p:667-704 Access Statistics for this article More articles in Journal of Law and Economics from University of Chicago Press |
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