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A smooth difference-in-differences model for assessing gradual policy effects: Revisiting the impact of banking deregulation on income distribution

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  • Wang, Zheng-Xin
  • Jv, Yue-Qi

Abstract

A smooth difference-in-differences (smooth DID) method is proposed to revisit the effects of banking deregulation in the United States on income distribution. This simpler nonlinear DID model includes a smooth transition function (STF) to determine gradual policy effects on treatment groups. Based on economic implications and a series of tests, the impact of bank deregulation on gradually reducing income inequality is confirmed.

Suggested Citation

  • Wang, Zheng-Xin & Jv, Yue-Qi, 2022. "A smooth difference-in-differences model for assessing gradual policy effects: Revisiting the impact of banking deregulation on income distribution," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004986
    DOI: 10.1016/j.frl.2022.103319
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    More about this item

    Keywords

    Difference-in-differences model; Banking deregulation; Income distribution; Gradual policy effect;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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