EconPapers    
Economics at your fingertips  
 

Finance as a barrier to entry: bank competition and industry structure in local U.S. markets

Nicola Cetorelli and Philip E. Strahan

No WP-04-04, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper tests how competition in local U.S. banking markets affects the market structure of non- financial sectors. Theory offers competing hypotheses about how competition ought to influence firm entry and access to bank credit by mature firms. Using data on U.S. local markets for banking and non-financial sectors, we find that more vigorous banking competition ? that is, lower concentration and looser restrictions on geographical expansion -- is associated with more firms in operation and with a smaller average firm size. In fact, the whole firm-size distribution shifts toward the origin as our measures of banking competition increase. Because we exploit data at the industry level, we are able to control for alternative (omitted) variables that may drive market structure both within and outside banking by exploiting differential reliance on bank finance across industrial sectors.

Keywords: Bank competition; Banking market (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-com, nep-ent, nep-geo and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2004/wp2004_04.pdf (application/pdf)

Related works:
Journal Article: Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets (2006) Downloads
Working Paper: Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets (2004) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-04-04

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().

 
Page updated 2025-03-27
Handle: RePEc:fip:fedhwp:wp-04-04