Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/60681 
Year of Publication: 
2000
Series/Report no.: 
Staff Report No. 129
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We investigate how bank migration across state lines over the last quarter century has affected the size and covariance of business fluctuations within states. Starting with a two-state version of the unit banking model in Holmstrom and Triocole (1997), we conclude that the theoretical effect of integration on business cycle size is ambiguous, because some shocks are dampened by integration while others are amplified. Empirically, we find that integration diminishes employment growth fluctuations within states, and decreases the deviations in employment growth across states. In other words, business cycles within states become smaller with integration, but more alike. Our results for the United States bear on the financial convergence under way in Europe, where banks remain highly fragmented across nations.
JEL: 
N1
G2
E3
Document Type: 
Working Paper

Files in This Item:
File
Size
102.95 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.