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

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  • Nicola Cetorelli
  • Philip E. Strahan

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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Bibliographic Info

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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Publication status: published as Cetorelli, Nicola and Philip E. Strahan. "Finance As A Barrier To Entry: Bank Competition and Industry Structure In Local U.S. Markets," Journal of Finance, 2006, v61(1,Feb), 437-461.
Handle: RePEc:nbr:nberwo:10832

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