Banking Deregulations, Financing Constraints, and Firm Entry Size

William Kerr and Ramana Nanda

No 15499, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the effect of US branch banking deregulations on the entry size of new firms using micro-data from the US Census Bureau. We find that the average entry size for startups did not change following the deregulations. However, among firms that survived at least four years, a greater proportion of firms entered either at their maximum size or closer to the maximum size in the first year. The magnitude of these effects were small compared to the much larger changes in entry rates of small firms following the reforms. Our results highlight that this large-scale entry at the extensive margin can obscure the more subtle intensive margin effects of changes in financing constraints.

JEL-codes: E44 G21 L26 L43 M13 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-ban, nep-bec, nep-com, nep-ent, nep-mac and nep-ure
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Citations: View citations in EconPapers (29)

Published as Kerr, William R. & Nanda, Ramana, 2009. "Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship," Journal of Financial Economics, Elsevier, vol. 94(1), pages 124-149, October.
Published as William R. Kerr & Ramana Nanda, 2010. "Banking Deregulations, Financing Constraints, and Firm Entry Size," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 582-593, 04-05.

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Journal Article: Banking Deregulations, Financing Constraints, and Firm Entry Size (2010)
Working Paper: Banking Deregulations, Financing Constraints and Firm Entry Size (2009)
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