In the paper, Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States, forthcoming in the Journal of Finance, my co-authors (Thorsten Beck and Alexey Levkov) and I assess the impact of bank deregulation on the distribution of income in the United States. Policymakers and economists disagree sharply about who wins and who loses from bank regulations. While some argue that the unregulated expansion of large banks will increase banking fees and reduce the economic opportunities of the poor, others hold that regulations restrict competition, protect monopolistic banks, and disproportionately help the rich. More generally, an influential political economy literature stresses that income distributional considerations, rather than efficiency considerations, frequently exert the dominant influence on bank regulations as discussed in Claessens and Perotti (2007) and Haber and Perotti (2008).

(more…)