Banking Consolidation and Small Firm Financing for Research and Development
Abstract: This paper examines the effect of increased market concentration of the banking industry caused by the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) on the availability of finance for small firms engaged in research and development (R&D). I measure the financing decisions of these small firms using a balanced panel of Small Business Innovation Research (SBIR) applications. Using difference-in-differences, I find IBBEA decreased the supply of finance for small R&D firms. This effect is larger for late adopters of IBBEA, which tended to be states with stronger small banking sectors pre-IBBEA.
File(s): File format is application/pdf http://www.federalreserve.gov/econresdata/feds/2016/files/2016029pap.pdf
Part of Series: Finance and Economics Discussion Series
Publication Date: 2016-04-08
Pages: 33 pages