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The duration of new firms in banking: an application of Cox regression analysis

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  • Enrico Santarelli

    () (UniversitÁ di Bologna, Dipartimento di Scienze Economiche - Strada Maggiore, 45, I-40125 BOLOGNA, ITALY)

Abstract

This paper studies the duration of two cohorts of entrants in the Italian financial intermediation industry. Using the Cox (1972) Proportional Hazards Model, it analyses the link between duration of each newborn firm and its start-up size, as well as a series of industry-specific characteristics. It emerges that not only did regulatory reform in 1990 result in a process of branch proliferation and industry concentration, but it also set in motion a pre-entry selection mechanism. Conversely, before completion of the regulatory reform, in 1989, entry was possible even for very small firms, and larger new entrants survived longer than their smaller counterparts, and this independently of the features of spatial and structural competition.

Suggested Citation

  • Enrico Santarelli, 2000. "The duration of new firms in banking: an application of Cox regression analysis," Empirical Economics, Springer, vol. 25(2), pages 315-325.
  • Handle: RePEc:spr:empeco:v:25:y:2000:i:2:p:315-325
    Note: received: Nov. 98/final version received: Oct. 99
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    Citations

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    Cited by:

    1. Robert DeYoung, 2000. "For how long are newly chartered banks financially fragile?," Working Paper Series WP-00-9, Federal Reserve Bank of Chicago.
    2. Giorgio Gobbi & Francesca Lotti, 2004. "Entry Decisions and Adverse Selection: An Empirical Analysis of Local Credit Markets," Journal of Financial Services Research, Springer;Western Finance Association, vol. 26(3), pages 225-244, December.
    3. DeYoung, Robert, 2003. "The failure of new entrants in commercial banking markets: a split-population duration analysis," Review of Financial Economics, Elsevier, vol. 12(1), pages 7-33.
    4. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 455-488, June.
    5. Martin Carree & Ingrid Verheul & Enrico Santarelli, 2011. "Sectoral patterns of firm exit in Italian provinces," Journal of Evolutionary Economics, Springer, vol. 21(3), pages 499-517, August.
    6. Louri, Helen & Peppas, Costas & Tsionas, Efthymios, 2006. "Foreign presence, technical efficiency and firm survival in Greece: a simultaneous equation model with latent variables approach," MPRA Paper 29274, University Library of Munich, Germany.
    7. Huong Dang & Graham Partington, 2014. "Rating Migrations: The Effect of History and Time," Abacus, Accounting Foundation, University of Sydney, vol. 50(2), pages 174-202, June.
    8. Iwona Markowicz, 2015. "Duration Analysis of Firms – Cohort Tables and Hazard Function," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(11), pages 36-47, November.
    9. Massimo Libertucci & Francesco Piersante, 2012. "Start-up banks� default and the role of capital," Temi di discussione (Economic working papers) 890, Bank of Italy, Economic Research and International Relations Area.
    10. Andrea Bellucci & Ilario Favaretto & Germana Giombini, 2014. "Does Innovation Affect Credit Access? New Empirical Evidence from Italian Small Business Lending," IAW Discussion Papers 104, Institut für Angewandte Wirtschaftsforschung (IAW).

    More about this item

    Keywords

    Proportional Hazards Model; Entry; Survival; Banking;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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