, Tomasz Michalski
and Evren Ors
Neslihan Dincbas: HEC Paris, Postal: 1 rue de la Libération, 78350 Jouy-en-Josas
Tomasz Michalski: HEC Paris, Postal: 1 rue de la Libération, 78350 Jouy-en-Josas
Evren Ors: HEC Paris, Postal: 1 rue de la Libération, 78350 Jouy-en-Josas
Abstract: We examine whether industry structure of an economy can be affected by its banks’ lending policies. We use US interstate bank-entry deregulations to identify the effect of banking integration on states’ manufacturing sector compositions. We find that states’ under-specialized (with respect to the US) and external-finance-dependent industries grow faster upon entry of banks from states that are overspecialized in the same sectors. We observe growth for industry value added, gross operating surplus, and output per employee, but none for the number of employees, their compensation or wages. Our results are indicative of a banking channel shaping the states’ industrial landscape.
52 pages, June 26, 2015
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