Abstract:

We study how bankers' expertise in identifying productive projects impacts the economic structure. We examine the U.S. 1980s interstate banking deregulation as a quasi-natural experiment on the structural transformation of non-financial sectors across states. The economic structure of those states with deregulated banking sectors became closer to each other because bankers brought their expertise to find productive projects across state borders. We build a two-state, two-sector search-and-matching model where bankers' expertise determines sector-specific matching efficiency between bankers and producers. As deregulation makes bankers' expertise more accessible across states, the economic structure converges across states, especially when firms depend on external funding.

Guest Bio:

Dr. Zhang Gang is currently an Assistant Professor of Economics at CKGSB. He obtained his Ph.D. in Economics from the University of Virginia in 2018. His research has been published in international academic journals such as the IMF Economic Review and Macroeconomic Dynamics. He has served as a Dissertation Internship at the Federal Reserve Bank of Kansas City, and as a researcher at the Inter-American Development Bank and the Triangle Census Research Data Center.