The Progress of the Interstate Banking Movement in the United States and Effects on Owners of Banking Organisations

Abstract

This study details the evolution of the interstate banking movement in the United States and the resultant effect on the wealth of shareholders of the affected banking organisations. State regulations regarding interstate banking are being relaxed at an increasing rate. Using an event-study methodology, this study investigates the resultant wealth positions of shareholders affected by the passage of liberalised interstate banking laws. Results indicate that shareholders do gain, although modestly, when regulations regarding interstate banking are relaxed. Thus, there seems to be some benefit to owners of these regulated firms when geographic expansion is permitted.