国际清算银行-区域不平等的财政根源（英）-2023.11-52页_595kb

The Financial Origins of Regional Inequality: Banking Deregulation and U.S. Regional Divergence

1 Introduction & Motivation

• Regional inequality has increased in the U.S., with urban incomes growing faster than rural ones since the 1980s.
• Prior policies focused on place-based interventions (tax incentives) but lack clarity on drivers of divergence.
• This paper examines banking deregulation as a key factor contributing to urban-rural income divergence.

Key Findings

### 1. Banking Deregulation Explains Income Growth Divergence
- Deregulation (allowing interstate banking) reduced geographic restrictions on banks.
- Overall income growth increased, but **urban counties experienced a 0.25–0.35 percentage point higher annual income growth** compared to rural areas.
- This urban premium persisted even after controlling for initial county characteristics, population trends, and industry-specific factors.

### 2. Mechanisms: Deregulation Increased Urban Banking Activity
- Deregulation led to:
  - Greater number of bank **branches and headquarters** in cities.
  - Increased **banking competition** (lower deposit shares of top three banks in urban areas).
  - More **mergers & acquisitions**, with urban banks being preferred acquisition targets.

### 3. Effects on Firms & Labor Markets
- Bank competition benefited **financially constrained firms** (smaller, younger, or higher-external-finance dependency firms).
- Resulted in higher **employment** and **wage growth** in urban areas relative to rural areas.

## Methodology
- **Difference-in-Differences** exploiting staggered state-level deregulation.
- Controls:
  - County and state fixed effects
  - Time trends and sectoral changes
- Shows no anticipation of the policy and no pre-trends in the outcome gap.

## Implications
- Deregulation **contributes to regional inequality** by easing financial constraints more in urban areas.
- Place-based policies should consider the role of local banking competition to promote balanced regional development.

## Keywords
banking deregulation, credit supply, income inequality, regional inequality