The Domestic and International Effects of Interstate U.S. Banking

Fabio Ghironi and Viktors Stebunovs

No 16613, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the domestic and international effects of the transition to an interstate banking system implemented by the U.S. since the late 1970s in a dynamic, stochastic, general equilibrium model with endogenous producer entry. Interstate banking reduces the degree of local monopoly power of financial intermediaries. We show that the an economy that implements this form of deregulation experiences increased producer entry, real exchange rate appreciation, and a current account deficit. The rest of the world experiences a long-run increase in GDP and consumption. Less monopoly power in financial intermediation results in less volatile business creation, reduced markup countercyclicality, and weaker substitution effects in labor supply in response to productivity shocks. Bank market integration thus contributes to a moderation of firm-level and aggregate output volatility. In turn, trade and financial ties between the two countries in our model allow also the foreign economy to enjoy lower GDP volatility in most scenarios we consider. The results of the model are consistent with features of the U.S. and international business cycle after the U.S. began its transition to interstate banking.

JEL-codes: E32 F32 F41 G21 (search for similar items in EconPapers)
Date: 2010-12
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Cacciatore, Matteo & Ghironi, Fabio & Stebunovs, Viktors, 2015. "The domestic and international effects of interstate U.S. banking," Journal of International Economics, Elsevier, vol. 95(2), pages 171-187.

Downloads: (external link)
http://www.nber.org/papers/w16613.pdf (application/pdf)

Related works:
Journal Article: The domestic and international effects of interstate U.S. banking (2015)
Working Paper: The Domestic and International Effects of Interstate U.S. Banking (2014)
Working Paper: The Domestic and International Effects of Interstate U.S. Banking (2014)
Working Paper: The Domestic and International Effects of Interstate U.S. Banking (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16613

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16613

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().