Does Finance Bolster Superstar Companies? Banks, Venture Capital, and Firm Size in Local U.S. Markets

Alexander Popov

No 1121, Working Paper Series from European Central Bank

Abstract: We study the relative effect of venture capital and bank finance on large manufacturing firms in local U.S. markets. Theory predicts that with venture capital, the firm size distribution should become more stretched-out to the right, but it’s ambiguous on the effect of banks on large firms. The empirical evidence suggests that while the average size of firms in the top bin of the firm size distribution has remained unaffected by banking sector developments, it has increased with venture capital investment. We argue that this is due to the emergence of new corporate giants rather than the growth of existing ones. JEL Classification: G24, J24, L11

Keywords: banking; firm size; venture capital (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-ban and nep-bec
Note: 861282
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20091121

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