U.S. banking deregulation and self-employment: A differential impact on those in need

Starting in 1978, the U.S. banking sector was gradually deregulated in terms of restrictions on geographical expansion. This paper examines the impact of intrastate branching deregulation on self-employment income growth rates. Cross-state evidence suggests that the growth rate of self-employment income increased after reform, with the effect being more pronounced for women and non-white minorities at the low end of the income distribution. As banks are the prime source of finance for the self-employed, the results suggest that branching reform led to improved access to credit for previously underserved business owners.