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Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets

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Author Info
Nicola Cetorelli
Philip E. Strahan

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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. The empirical evidence, however, strongly supports the idea that in markets with concentrated banking, potential entrants face greater difficulty gaining access to credit than in markets where banking is more competitive.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10832.

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Date of creation: Oct 2004
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Handle: RePEc:nbr:nberwo:10832

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G2 - Financial Economics - - Financial Institutions and Services

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