TY - JOUR
T1 - Locally Owned Bank Concentration and Business Start-Ups and Closures in U.S. Metropolitan, Micropolitan, and Rural Counties from 1980-2010
AU - Carpenter, Craig Wesley
AU - Mencken, F. Carson
AU - Tolbert, Charles M.
AU - Lotspeich, Michael
N1 - Funding Information:
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. Keywords: financing, loans, small business, local banks JEL Codes: G21, L26, R51 ∗This line of research was supported, in part, by the Agriculture and Food Research Initiative of the National Institute of Food and Agriculture, grants 2011–67023–30072, 2017-67023-26242, and 2018-68006-27641. Portions of this work were carried out in the Texas Federal Statistical Research Data Center. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. Craig Wesley Carpenter is an Assistant Professor and Extension Specialist at Texas AM University, College Station, TX 77843, and an Extension Specialist at Michigan State University, East Lansing, MI 48824. F. Carson Mencken and Charles M. Tolbert are Professors at Baylor University, Waco, TX 76798. Michael Lotspeich is a PhD Candidate at Baylor University, Waco, TX 76798. Corresponding Author: Craig Wesley Carpenter, Email: [email protected]
Publisher Copyright:
© Southern Regional Science Association 2020.
PY - 2020
Y1 - 2020
N2 - 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.
AB - 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.
KW - Financing
KW - Loans
KW - Local banks
KW - Small business
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U2 - 10.52324/001c.11479
DO - 10.52324/001c.11479
M3 - Article
SN - 1553-0892
VL - 50
SP - 14
EP - 42
JO - Review of Regional Studies
JF - Review of Regional Studies
IS - 1
ER -