Working Paper: NBER ID: w15499
Authors: William Kerr; Ramana Nanda
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.
Keywords: banking deregulations; financing constraints; firm entry size
JEL Codes: E44; G21; L26; L43; M13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US branch banking deregulations (G28) | changes in financing constraints (G32) |
| changes in financing constraints (G32) | firm entry size (L25) |
| US branch banking deregulations (G28) | firm entry size (L25) |
| US branch banking deregulations (G28) | extensive margin (number of firms entering) (L25) |
| US branch banking deregulations (G28) | intensive margin (entry size) (L25) |