CREDIT CONSTRAINTS AND DEMAND FOR HIGHER EDUCATION : EVIDENCE FROM FINANCIAL DEREGULATION

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)12-24
Journal / PublicationThe Review of Economics and Statistics
Volume98
Issue number1
Online published4 Mar 2016
Publication statusPublished - Mar 2016
Externally publishedYes

Abstract

We use staggered banking deregulation across states in the United States to examine the impact of the resulting increased credit supply on college enrollment from the 1970s to the early 1990s. Our research design produces estimates that are not confounded by wealth effects due to changes in income or housing wealth. We find that lifting banking restrictions raises college enrollment by about 2.6 percentage points (4.9%). We rule out alternative interpretations by examining results for different income groups and bankrupt households. We also find similar effects for two-year or four-year college completion and supporting evidence in household educational borrowing.