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The Effect of the Bank Regulatory Environment on State Economic Activity
Sep 01, 1994
Robert Krol and Shirley Svorny



This paper examines the idea that bank regulation affects economic activity. It presumes that bank regulation affects bank costs and competition, influencing the level of financial intermediation.

Empirical tests, based on state level data for the period from 1970 to 1988, show economic activity to be higher in states that allow statewide branching and interstate banking, facilitate bank holding company operations, are free of usury limits on corporate borrowers, and provide a regulatory environment that reduces bank operating costs.