Don’t Lions Help Lambs? Small Bank Supply and Small Business Activity

48 Pages Posted: 6 Sep 2010

See all articles by Jay Y. Li

Jay Y. Li

University of North Carolina at Greensboro

Date Written: June 15, 2009

Abstract

I study whether the supply of small banks in a local area impacts small business activity. By using a natural experiment together with a triple differences estimation based on a propensity score matched sample, I am able to identify the exogenous effect of small banks’ market presence. Although small banks may have a comparative advantage in relationship banking, I find that their market share in the local area does not have a significant impact on small business activity. My results imply that relationship banking is not crucial for average small businesses and that large banks’ entrance to the local banking industry does not necessarily threat local small businesses’ development.

JEL Classification: G21

Suggested Citation

Li, Jay Y., Don’t Lions Help Lambs? Small Bank Supply and Small Business Activity (June 15, 2009). Available at SSRN: https://ssrn.com/abstract=1670800 or http://dx.doi.org/10.2139/ssrn.1670800

Jay Y. Li (Contact Author)

University of North Carolina at Greensboro ( email )

Department of Accounting and Finance
Greensboro, NC
United States
336 334 5647 (Phone)

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