The Impact of Banking Regulations and Deregulations on the Stock and Housing Markets

Abstract

The November 8, 2016 election results have boosted stock market performance due to possible upcoming policy changes. The likelihood for even more gains come because of plans to increase government spending, cut corporate taxes, and deregulate the banking sector once again. By looking at the regulations from 1995 to 2017, I assess the effect of changing bank regulations through movements in stock returns and housing prices. By running regressions on these and other variables, I found the regulations’ impact on house prices, the returns of the stock market, and the stock market’s volatility. I argue that deregulations are only beneficial up to a certain point, which is especially important given that there is much debate about whether the government should repeal the Dodd-Frank act since Donald Trump’s election victory.