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Article | Journal of the European Economic Association | April – May 2010

Banking Deregulations, Financing Constraints and Firm Entry Size

by William R. Kerr and Ramana Nanda

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Abstract

We examine the effect of US branch banking deregulations on the entry size of new firms using micro-data from the US Census Bureau. We find that the average entry size for startups did not change following the deregulations. However, among firms that survived at least four years, a greater proportion of firms entered either at their maximum size or closer to the maximum size in the first year. The magnitude of these effects were small compared to the much larger changes in entry rates of small firms following the reforms. Our results highlight that this large-scale entry at the extensive margin can obscure the more subtle intensive margin effects of changes in financing constraints.

Keywords: Business Startups; Financing and Loans; Governing Rules, Regulations, and Reforms; Market Entry and Exit; Banking Industry; United States;

Format: Print 12 pages Find at Harvard Read Now

Citation:

Kerr, William R., and Ramana Nanda. "Banking Deregulations, Financing Constraints and Firm Entry Size." Journal of the European Economic Association 8, nos. 2-3 (April–May 2010): 582–593.

About the Authors

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William R. Kerr
Dimitri V. D'Arbeloff - MBA Class of 1955 Professor of Business Administration
Entrepreneurial Management

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Ramana Nanda
Sarofim-Rock Professor of Business Administration
Entrepreneurial Management

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More from these Authors

  • Working Paper | HBS Working Paper Series | 2019

    Immigrant Networking and Collaboration: Survey Evidence from CIC

    Sari Pekkala Kerr and William R. Kerr

    Networking and the giving and receiving of advice outside of one’s own firm are important features of entrepreneurship and innovation. We study how immigrants and natives utilize the potential networking opportunities provided by CIC, formerly known as the Cambridge Innovation Center. CIC is widely considered the center of the Boston entrepreneurial ecosystem. We surveyed 1,334 people working at CIC in three locations spread across the Boston area and CIC’s first expansion facility in St. Louis, Missouri. Survey responses show that immigrants value networking capabilities in CIC more than natives, and the networks developed by immigrants at CIC tend to be larger. Immigrants report substantially greater rates of giving and receiving advice than natives for six surveyed factors: business operations, venture financing, technology, suppliers, people to recruit, and customers. The structure and composition of CIC floors has only a modest influence on these immigrant versus native differences.

    Keywords: Immigrants; Networking; advice; entrepreneurs; inventors; start-up employees; venturing; co-working; agglomeration; Immigration; Entrepreneurship; Networks; Innovation and Invention; Social and Collaborative Networks;

    Citation:

    Kerr, Sari Pekkala, and William R. Kerr. "Immigrant Networking and Collaboration: Survey Evidence from CIC." Harvard Business School Working Paper, No. 19-078, January 2019.  View Details
    CiteView Details Read Now Related
  • Teaching Note | HBS Case Collection | January 2019

    The Golden Triangle: Back in Business (A)

    William R. Kerr, Joseph B. Fuller, Manjari Raman and Donald Maruyama

    Citation:

    Kerr, William R., Joseph B. Fuller, Manjari Raman, and Donald Maruyama. "The Golden Triangle: Back in Business (A)." Harvard Business School Teaching Note 819-066, January 2019.  View Details
    CiteView DetailsPurchase Related
  • Case | HBS Case Collection | December 2018

    Modern Automation (A): Artificial Intelligence

    William R. Kerr and James Palano

    This primer provides an overview of the implications of automation technology based on state-of-the-art "Artificial Intelligence" (AI) in the late 2010s: including the trends leading to the surge in AI, applications of AI categorized by the type of work performed, limitations of the technology, discussion about AI adoption, and key concerns the technology brought about.

    Keywords: artificial intelligence; digitization; connectivity; Computing; future of work; automation; Technology; Technology Adoption; Employment; Management;

    Citation:

    Kerr, William R., and James Palano. "Modern Automation (A): Artificial Intelligence." Harvard Business School Case 819-084, December 2018.  View Details
    CiteView DetailsEducators Related
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