Locally Owned Bank Concentration and Business Start-Ups and Closures in U.S. Metropolitan, Micropolitan, and Rural Counties from 1980-2010

Craig Wesley Carpenter, F. Carson Mencken, Charles M. Tolbert, Michael Lotspeich

Research output: Contribution to journalArticlepeer-review

Abstract

Access to financial capital is vital for the sustainability of the local business sector. Recent research on the restructuring of the financial industry from local owned banks to interstate conglomerates has raised questions about the impact on local economies, especially in rural areas. We examine the impact of bank ownership concentration on business formations, continuations, and deaths in metropolitan, micropolitan, and rural non-core U.S. counties. Using limited-access Census data, we find that local bank concentration is positively related to business births and deaths, or churn, in rural counties, but the opposite effects occur in metropolitan areas. We demonstrate robustness to several specifications and spatial spillover effects.

Original languageEnglish (US)
Pages (from-to)14-42
Number of pages29
JournalReview of Regional Studies
Volume50
Issue number1
DOIs
StatePublished - 2020
Externally publishedYes

Keywords

  • Financing
  • Loans
  • Local banks
  • Small business

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Earth-Surface Processes

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