Foreign Bank Entry and Business Volatility: Evidence from U.S. States and Other Countries / Donald Morgan, Philip Strahan.

Format:

Book

Author/Creator:

Morgan, Donald.

Contributor:

National Bureau of Economic Research.

Strahan, Philip.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9710.

NBER working paper series no. w9710

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Foreign Bank Entry and Business Volatility

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Theory suggests that bank integration (financial integration generally) can magnify or dampen the business cycles, depending on the importance of shocks to firm collateral versus shocks to the banking sector. In this paper, we show empirically that bank integration across U.S. states over the late 1970s and 1980 dampened economic volatility within states. Internationally, however, we find that foreign bank integration, which advanced widely during the 1990s, has been either unrelated to volatility of firm investment spending or positively related to that volatility. The results suggest the possibility that business spending may become more volatile as countries open their banking sectors to foreign entry.

Notes:

Print version record

May 2003.