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

  • NICOLA CETORELLI
  • PHILIP E. STRAHAN

This paper tests how competition in local U.S. banking markets affects the market structure of nonfinancial 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 in which banking is more competitive. Copyright 2006 by The American Finance Association.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6261.2006.00841.x
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Article provided by American Finance Association in its journal The Journal of Finance.

Volume (Year): 61 (2006)
Issue (Month): 1 (02)
Pages: 437-461

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Handle: RePEc:bla:jfinan:v:61:y:2006:i:1:p:437-461
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