Bank geographic deregulation, new credit accounts, and consumer credit

The bank deregulation literature documents positive effects of intrastate branching—allowing expansion of bank‐branch network within a state—on real economic outcomes such as income growth, income insurance, income inequality, and homeownership. The suggested mechanism is the availability of secured bank loans to small businesses and to underserved populations such as self‐employed minorities (women and persons of color). This article demonstrates the effect of the Riegle‐Neal IBBEA of 1994 (interstate branching) on unsecured consumer credit. Based on the county‐level credit bureau data, the analysis shows that credit amounts and the number of new bank cards increased primarily in counties with highly concentrated bank deposits. The effect is stronger in counties that are rural or experience high income growth. These findings help solidify the earlier demonstrated effects of intrastate branching.