ECONOMIC GROWTH, SUBURBANIZATION, AND STATE BRANCH BANKING LAWS, 1970-1980: AN ECONOMIC AND EMPIRICAL ANALYSIS

The purposes of this dissertation are: (1) to determine key characteristics states possessed that made them more likely to have liberalized their branch banking laws between 1970 and 1980, (2) to determine if economic growth was associated with the decisions of various state legislatures to liberalize their laws, and (3) to analyze the public policy options with respect to multiple-office banking regulation.;The results suggest that economic growth was not a significant factor explaining why states liberalized their branch banking laws. States were more likely to have liberalized their laws if they experienced a more rapid growth in their suburban populations, if their banking systems contained fewer small banks and more intermediate sized banks or if they had state-wide holding company legislation in effect at the beginning of the 1970-1980 period. One interpretation of this latter result is that the holding company is not a completely adequate substitute for the conventional branch bank.;The public policy section concludes that most of the concerns with branch banking are unfounded. Increased branching, however, has been associated with an increase in industry concentration which may be undesirable for competition and for political reasons. An appropriate policy, then, would be one that encourages branching yet builds in safeguards to ensure that the industry does not become concentrated and/or less competitive. Interstate branch banking modified by a provision that limits entry to foothold or de novo methods is recommended. The empirical section of the thesis suggests that reforms which call for the liberalization of holding company restrictions alone would not be satisfactory.;The hypothesis is that the decision of a state legislature to liberalize its branch banking laws depends upon economic growth, the change in the suburban population relative to the remainder of the population, bank size within a state at the beginning of the period, and the status of state holding company legislation. A logit model is used because the dependent variable, the establishment of a more liberal branch banking law, is binary.