The impact of banks' statewide economic power on their political power: An empirical analysis

The extent to which banks' economic power in a state is related to one dimension of political power-their state and local tax burden-is tested. The hypothesis says that in states in which banks have relatively high economic power, banks pay relatively low state and local taxes. The empirical evidence presented supports the hypothesis that the level of banking concentration does not have a significant impact on banks' political influence. This result is consistent with the findings of Rose, Siegfried, and Salamon and Siegfried. Also, average bank size seems to be negatively related to political power within the state.