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Banking Deregulations, Financing Constraints, and Firm Entry Size

William Kerr () and Ramana Nanda ()

Journal of the European Economic Association, 2010, vol. 8, issue 2-3, 582-593

Abstract: We examine the effect of U.S. branch banking deregulations on the entry size of new firms, using micro-data from the U.S. 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: E44, G21, L26, L43, M13) (c) 2010 by the European Economic Association.

JEL-codes: E44 G21 L26 L43 M13 (search for similar items in EconPapers)
Date: 2010
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