Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship
نویسندگان
چکیده
We study how US branch banking deregulations a¤ected the entry and exit of rms in the non- nancial sector using establishment-level data from the US Census Bureaus Longitudinal Business Database. The comprehensive micro-data allow us to study how the entry rate, the distribution of entry sizes, and survival rates for rms responded to changes in banking competition. We also distinguish the relative e¤ect of the policy reforms on the entry of startups versus facility expansions by existing rms. We nd that the deregulations reduced nancing constraints, particularly among small startups, and improved allocative e¢ ciency across the entire rm size distribution. However, the US deregulations also led to a dramatic increase in churningat the lower end of the size distribution, where new startups fail within the rst three years following entry. This churning emphasizes a new mechanism through which nancial sector reforms impact product markets. It is not exclusively better ex ante allocation of capital to quali ed projects that causes creative destruction; rather banking deregulations can also democratizeentry by allowing many more startups to be founded. The vast majority of these new entrants fail along the way, but a few survive ex post to displace incumbents. JEL Classi cation: E44, G21, L26, L43, M13. Key Words: banking, nancial constraints, entrepreneurship, entry, exit, creative destruction, growth, deregulation. Comments are appreciated and can be sent to [email protected] and [email protected]. We are grateful to Rodrigo Canales, Nicola Cetorelli, Shawn Cole, Jim Davis, Victoria Ivashina, Ron Jarmin, Josh Lerner, Javier Miranda, Steve Ross, David Scharfstein, Antoinette Schoar, Jesper Sorensen, Phil Strahan, Rebecca Zarutskie and seminar participants at Census Bureau, Kellogg, Harvard, IPE, MIT, NBER, and the University of Connecticut for insightful comments on this paper. We also thank the Innovation Policy and the Economy group for nancial assistance. The research in this paper was conducted while the authors were Special Sworn Status researchers of the U.S. Census Bureau at the Boston Census Research Data Center (BRDC). Support for this research from NSF grant (ITR-0427889) is gratefully acknowledged. Research results and conclusions expressed are our own and do not necessarily reect the views of the Census Bureau or NSF. This paper has been screened to insure that no con dential data are revealed.
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تاریخ انتشار 2007