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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 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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File URL: http://www.nber.org/papers/w10832.pdf
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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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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
Note: CF IO
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  1. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics And Politics Of The Relaxation Of Bank Branching Restrictions," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1437-1467, November.
  2. Nicola Cetorelli, 2004. "Real effects of bank competition," Working Paper Series WP-04-03, Federal Reserve Bank of Chicago.
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