Increased interdependencies across countries have led to calls for greater harmonization of regulations to prevent local shock from spilling over to other countries. Using the rulemaking process of the Basel Committee on Banking Supervision (BCBS), this paper studies the process through which...

The financial crisis of 2008 highlighted the debilitating effect that a disruption in the banking sector can have on the macro-economy. Not surprisingly, therefore, preserving banking sector stability has occupied center stage in regulatory and policy making circles. As well, the popular...

We show that finance influences innovation by young private firms, an important source of long-term economic growth. We develop a simple theoretical model that predicts that a decrease (increase) in banks' bargaining power vis-a-vis entrepreneurs increases (decreases) both the volume and...

Does deregulation of bank entry enhance bank stability or exacerbate bank fragility? Since the theoretically predicted effect of deregulation of bank entry on bank failures is ambiguous, this question has to be answered empirically. In this paper, we analyze the impact of deregulation of entry...

We document empirical support for a key micro-level channel --- innovation by young, private firms --- through which financial sector deregulation affects economic growth. We find that intrastate banking deregulation, which increased the local market power of banks, decreased the level and risk...