Branch Banking Restrictions and Finance Constraints in Early-Twentieth-Century America
AbstractThis article studies the effects of branch banking restrictions on American firm investment and growth. Authors have suggested that the lack of widespread branching bank networks hindered the development of large-scale industrial firms. This article presents a model that implies that restrictions on branch banking cause the severity of external finance constraints to increase with firm size. This hypothesis is tested using a panel data set of over 250 firms for 1911 1922. Investment and growth sensitivities are significantly higher for large firms than for smaller firms, suggesting that branch banking restrictions hindered the expansion of large-scale firms.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal The Journal of Economic History.
Volume (Year): 65 (2005)
Issue (Month): 01 (March)
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- Kris James Mitchener & David C. Wheelock, 2010.
"Does the Structure of Banking Markets Affect Economic Growth? Evidence from U.S. State Banking Markets,"
NBER Working Papers
15710, National Bureau of Economic Research, Inc.
- Mitchener, Kris James & Wheelock, David C., 2013. "Does the structure of banking markets affect economic growth? Evidence from U.S. state banking markets," Explorations in Economic History, Elsevier, vol. 50(2), pages 161-178.
- Kris James Mitchener & David C. Wheelock, 2010. "Does the structure of banking markets affect economic growth? evidence from U.S. state banking markets," Working Papers 2010-004, Federal Reserve Bank of St. Louis.
- Charles W. Calomiris & Stephen H. Haber, 2014. "Interest Groups and the Glass-Steagall Act," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 11(4), pages 14-18, 01.
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