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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.

Suggested Citation

  • Nicola Cetorelli & Philip E. Strahan, 2004. "Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets," NBER Working Papers 10832, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10832
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    References listed on IDEAS

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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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