“The Effect of Bank Competition: Evidence From the Real Economy”
Sabbatical Talk
Yingying Shao, Department of Finance
FRIDAY, MAY 4 | TIME: 12 P.M. | ROOM: ST 115
Part of the College of Business and Economics’ Development & Research Conference
Abstract: This study examines the economic impact of regulatory reforms that occurred in the United States from the mid-1970s through the mid-1990s. By integrating economic activities of various entities with the state-specific process of bank deregulation that lowered barriers to competition, this study first finds that an intensification of bank competition improves interstate risk sharing in two different channels: personal consumption smoothing and personal income insurance. In addition, this study reveals that increased bank competition have different impacts on corporate firms that are related along supply chains. On the one hand, supplier firms with higher reliance on bank credit offer more trade credit to their customers. On the other hand, facing the increase in both trade credit and bank credit, customer firms make more use of bank credit to finance their inventory investment.
