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The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition among Small and Large Banks / Nicholas Economides, R. Glenn Hubbard, Darius Palia.
- Format:
- Book
- Author/Creator:
- Economides, Nicholas.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w5210.
- NBER working paper series no. w5210
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Political Economy of Branching Restrictions and Deposit Insurance
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1995.
- Summary:
- This paper 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 were instituted for the benefit of the small, unit banks that were unable to compete effectively with large, multi- unit 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.
- Notes:
- Print version record
- August 1995.
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