The effect of branching deregulation on finance wage premium

2026/07/01 by Ahmet Ali Taşkın, Fırat Yaman
Business, Management and Accounting · Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Corporate Finance and Governance #Global Financial Regulation and Crises

paper · doi:10.1016/j.labeco.2026.102925

openalex publication_date 2026/07/01 · openalex created_date 2026/07/16 · openalex updated_date 2026/07/23

Abstract

How does financial deregulation contribute to the rising finance wage premium in the US? This study uses the Interstate Banking and Branching Efficiency Act of 1994 as an exogenous shift to local banking markets and investigates the effect of branching deregulation on relative wages in finance. We find that the finance wage premium increased significantly in deregulated states, driven by direct effects on wages in commercial banking and spillover effects on the broader financial industry. Our estimates suggest that the deregulation explains approximately a quarter of the increase in the finance wage premium between 1994 and 2008.

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