Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship

Abstract

The research program of the Center for Economic Studies (CES) produces a wide range of theoretical and empirical economic analyses that serve to improve the statistical programs of the U.S. Bureau of the Census. Many of these analyses take the form of CES research papers. The papers are intended to make the results of CES research available to economists and other interested parties in order to encourage discussion and obtain suggestions for revision before publication. The papers are unofficial and have not undergone the review accorded official Census Bureau publications.The opinions and conclusions expressed in the papers are those of the authors and do not necessarily represent those of the U.S. Bureau of the Census. Republication in whole or part must be cleared with the authors.

SURVIVING CREDIT MARKET COMPETITION*

“…For the argument just spelled out, firms should now be better positioned to weather adverse events, which should be reflected in unconditional better odds of survival in postreform years. This conjectured effect on the population of potential loan applicants is corroborated, for instance, in the micro studies by Nanda (2008Nanda ( , 2010 of the population of Danish entrepreneurs. Individuals who in a tougher environment would have actually chosen not to undertake entrepreneurial activity at all are now joining the pool of new loan applicants.…”

“…Kerr and Nanda (2008) have made use of the same dataset, but there are fundamental 8. The database contains confidential information on the entire universe of business organizations with at least one employee ever recorded in the United States from 1975 to 2005.…”

“…Through the estimation of hazard models, I document that the same enhancement in bank competition-the decision by states to open up to out-of-state banking-that both Black and Strahan (2002) and Kerr and Nanda (2008) find to have such an important impact on entry, has broader and more complex effects on firms' population dynamics. First, I show that in times of constrained finance, firms face relatively high odds of mortality.…”

Better Together? Signaling Interactions in New Venture Pursuit of Initial External Capital

“…Acquiring initial external capital represents a major accomplishment as many young firms never receive any outside financial backing (Kerr & Nanda, 2009). One reason is that most new ventures suffer from substantial information asymmetry between the venture and potential investors (Sanders & Boivie, 2004;Wiklund, Baker, & Shepherd, 2010).…”

Investment Strategies and Market Structure: An Empirical Analysis of Bank Branching Decisions

“…It is reasonable, however, to expect that unobservable factors that affect the returns to operating additional branches within a market may also affect that banking 6 A series of papers has examined the consequences of regulatory changes on dynamic efficiency (Jayaratne and Strahan 1998), entry (Amel and Liang 1992), merger and acquisition activity (Berger et al 2004) and entrepreneurship (Kerr and Nanda 2008). 7 For example, Hannan and Prager (2004) find that the share of deposits held by multimarket banks is negatively related to deposit rates offered by single-market banks.…”