Locally Owned Bank Commuting Zone Concentration and Employer Start-Ups in Metropolitan, Micropolitan and Non-Core Rural Commuting Zones from 1970-2010
August 2018
Working Paper Number:
CES-18-34
Abstract
Access to financial capital is vital for the sustainability of the local business sector in metropolitan and nonmetropolitan communities. Recent research on the restructuring of the financial industry from local owned banks to interstate conglomerates has raised questions about the impact on rural economies. In this paper, we begin our exploration of the Market Concentration Hypothesis and the Local Bank Hypothesis. The former proposes that there is a negative relationship between the percent of banks that are locally owned in the local economy and the rate of business births and continuations, and a positive effect on business deaths, while that latter proposes that there is a positive relationship between the percent of banks that are locally owned in the local economy and the rate of business births and continuations, and a negative effect on business deaths. To examine these hypotheses, we examine the impact of bank ownership concentration (percent of banks that are locally owned in a commuting zone) on business establishment births and deaths in metropolitan, micropolitan and non-core rural commuting zones. We employ panel regression models for the 1980-2010 time frame, demonstrating robustness to several specifications and spatial spillover effects. We find that local bank concentration is positively related to business dynamism in rural commuting zones, providing support to the importance of relational lending in rural areas, while finding support for the importance of market concentration in urban areas. The implications of this research are important for rural sociology, regional economics, and finance.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
econometric,
merger,
financial,
finance,
financing,
sector,
recession,
regional,
capital,
bank,
lending,
metropolitan,
rural,
spillover,
population,
geography,
banking
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Longitudinal Business Database,
Decennial Census,
2020 Census
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Locally Owned Bank Commuting Zone Concentration and Employer Start-Ups in Metropolitan, Micropolitan and Non-Core Rural Commuting Zones from 1970-2010' are listed below in order of similarity.
-
Working PaperTHE IMPACT OF LATINO-OWNED BUSINESS ON LOCAL ECONOMIC PERFORMANCE
January 2016
Working Paper Number:
CES-16-34
This paper takes advantage of the Michigan Census Research Data Center to merge limited-access Census Bureau data with county level information to investigate the impact of Latino-owned business (LOB) employment share on local economic performance measures, namely per capita income, employment, poverty, and population growth. Beginning with OLS and then moving to the Spatial Durbin Model, this paper shows the impact of LOB overall employment share is insignificant. When decomposed into various industries, however, LOB employment share does have a significant impact on economic performance measures. Significance varies by industry, but the results support a divide in the impact of LOB employment share in low and high-barrier industries.View Full Paper PDF
-
Working PaperSmall Business Growth and Failure during the Great Recession: The Role of House Prices, Race & Gender
November 2016
Working Paper Number:
carra-2016-08
Using 2002-2011 data from the Longitudinal Business Database linked to the 2002 and 2007 Survey of Business Owners, this paper explores whether (through a collateral channel) the rise in home prices over the early 2000's and their subsequent fall associated with the Great Recession had differential impacts on business performance across owner race, ethnicity and gender. We find that the employment growth rate of minority-owned firms, particularly black and Hispanic-owned firms, is more sensitive to changes in house prices than is that of their nonminority-owned counterparts.View Full Paper PDF
-
Working PaperBrighter Prospects? Assessing the Franchise Advantage using Census Data
January 2017
Working Paper Number:
CES-17-21
This paper uses Census micro data to examine how starting a business as a franchise rather than an independent business affects its survival and growth prospects. We first consider the factors that influence the business owner's decision about being franchised, and then use different empirical approaches to correct for selection bias in our performance analyses. We find that franchised businesses on average benefit from higher survival rates and faster initial growth relative to independent businesses. However, the effects are not large and, conditional on first-year survival, the differences basically disappear. We briefly discuss potential mechanisms to explain these results. U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. Support for this research at the Michigan Census Research Data Center is gratefully acknowledged.View Full Paper PDF
-
Working PaperAnalysis of Young Neighborhood Firms Serving Urban Minority Clients
May 2008
Working Paper Number:
CES-08-11
This study empirically investigates Michael Porter's hypothesis that urban minority neighborhoods offer attractive opportunities to household-oriented businesses, such as retail firms (1995). Our analysis compares the traits and performance of firms serving predominantly minority clients to those selling their products largely to clients who are nonminority whites. Controlling statistically for applicable firm and owner characteristics, our findings indicate that the minority neighborhood niche does not offer young firms an attractive set of opportunities. Relative to opportunities in the corresponding nonminority household niche and the broader regional marketplace, the neighborhood minority household market is associated with reduced business viability.View Full Paper PDF
-
Working PaperJob Flow Dynamics in the Service Sector
November 1999
Working Paper Number:
CES-99-14
This paper uses the new comprehensive Longitudinal Establishment and Enterprise Microdata at CES to investigate gross and net job flows for 1990 to 1995 for all establishments in the service sector. After examining the recent shifts in the distribution of employment in non-financial services, from single unit firms to multi-unit firms, and from smaller firms to larger ones, we calculate five year gross and net job flow rates for these various types of establishments. This shows that the increasing share of service employment in large firms is not due to higher growth in larger firms. Seeking the dynamics behind the shift of employment to larger firms, we investigate how job flow rates are related to firm and establishment size, using alternative size classification methods. Gross job flow rates vary inversely with the age of establishments in services, as do net growth rates of surviving establishments, even after controlling for size. To help distinguish among the effects of age, firm size, and establishment size on gross and net job flows in services, multivariate regression analysis is used. We find that all gross job flow rates decline with increasing age of establishments when size and industry differences are controlled. Because the job destruction rate falls faster than the creation rate as age increases, net growth rates increase with age for services as a whole. Gross and net job creation also declines with increasing size of establishments, but destruction rates increase with size when controlling for age and industry differences. Firm size differences contribute little or nothing additional when we control for establishment size and age.View Full Paper PDF
-
Working PaperMEASURES OF JOB FLOW DYNAMICS IN THE U.S.*
January 1999
Working Paper Number:
CES-99-01
This paper uses the new Longitudinal Establishment and Enterprise Microdata (LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous work on U.S. job flows has been based on analysis of the Longitudinal Research Database (LRD), which is limited to establishments in the manufacturing sector. The LEEM is the first high-quality, nationwide, comprehensive database for both manufacturing and non-manufacturing that is suitable for measuring annual job flows. We utilize the LEEM data to measure recent gross and net job flows for the entire U. S. economy. We then examine the relationships between firm size, establishment size, and establishment age, and investigate differences resulting from use of two alternative methods for classification of job flows by size of firm and establishment. Cell-based regression analysis is used to help distinguish among the effects of age, firm size, and establishment size on gross and net job flows in existing establishments. We find that gross job flow rates decline with age, and with increasing establishment size when controlling for age differences, whether initial size or mean size classification is utilized. Firm size differences contribute little or nothing additional when establishment size and age are controlled for. However, the relationship of net job growth to business size is very sensitive to the size classification method, even when data and all other methodology are identical. When mean size classification is used, the coefficient on establishment size for net job growth is generally positive, but when initial size is used, this coefficient is negative. These results shed light on some of the apparently conflicting findings in the literature on the relationship between net growth and the size of businesses.View Full Paper PDF
-
Working PaperOWNER CHARACTERISTICS AND FIRM PERFORMANCE DURING THE GREAT RECESSION
September 2014
Working Paper Number:
CES-14-36
Minority owned businesses are an increasing important component of the U.S. economy, growing at twice the rate of all U.S. businesses between 2002 and 2007. However, a growing literature indicates that minority-owned businesses may have been especially impacted by the Great Recession. As house prices declined, foreclosures fell disproportionately on urban minority neighborhoods and one of the sources of credit for business owners was severely constrained. Using 2002-2011 data from the Longitudinal Business Database linked to the 2002 Survey of Business Owners, this paper adds to the literature by examining the employment growth and survival of minority and women employer businesses during the last decade, including the Great Recession. At first glance, our preliminary findings suggest that black and women-owned businesses underperform white, male-owned businesses, that Asian-owned businesses outperform other groups, and that Hispanic-owned businesses outperform non-Hispanic ones in regards to employment growth. However, when we look only at continuing firms, black-owned businesses outperform white-owned businesses in terms of employment growth. At the same time, we also find that the recession appears to have impacted black-owned and Hispanic-owned businesses more severely than their counterparts, in terms of employment growth as well as survival. This is also the case for continuing black and Hispanic-owned firms.View Full Paper PDF
-
Working PaperPast Experience and Future Success: New Evidence on Owner Characteristics and Firm Performance
September 2010
Working Paper Number:
CES-10-24
Because the ability of entrepreneurs to start their own businesses is key to the success of the U.S. economy and to the economic mobility of many disadvantaged demographic groups, understanding why entrepreneurship activity varies across groups and geography is an increasingly important issue. As a step in this direction we employ a novel set of metrics of business success to the growing literature and find great variation across groups and metrics. For example, we find that black-owned firms grow slower than white or Asian-owned firms. However, once we condition on firm survival, the differences disappear. Interestingly, we also find differences across groups in their start-up histories. For example, Asian-owned firms are less likely than white-owned firms to have started-out as nonemployers but firms owned by all other minority groups, as well as women-owned firms, are more likely to start-out without employees.View Full Paper PDF
-
Working PaperA Shore Thing: Post-Hurricane Outcomes for Businesses in Coastal Areas
September 2020
Working Paper Number:
CES-20-27
During the twenty-first century, hurricanes, heavy storms, and flooding have affected many areas in the United States. Natural disasters and climate change can cause property damage and could have an impact on a variety of business outcomes. This paper builds upon existing research and literature that analyzes the impact of natural disasters on businesses. Specifically, we look at the differential effect of eight hurricanes during the period 2000-2009 on establishments in coastal counties relative to establishments in coastal-adjacent or inland counties. Our outcomes of interest include establishment employment and death. We find that following a hurricane event, establishments located in a coastal county have lower employment and increased probability of death relative to establishments in non-coastal counties.View Full Paper PDF
-
Working PaperFinancial Intermediation and Late Development: The Case of Meiji Japan, 1868 to 1912
January 2008
Working Paper Number:
CES-08-01
Was nineteenth century Japan an example of finance-led growth? Using a new panel dataset of startup firms from the Meiji Period (1868-1912), I test whether financial sector development influenced the emergence of modern industries. Results from multiple econometric models suggest that increased financial intermediation, particularly from banks, is associated with greater firm establishment. This corresponds with the theory of late development that industrialization requires intermediaries to mobilize and allocate financing. The effect is pronounced in the second half of the period and for heavy industries, which may be due to improved institutions and larger capital requirements, respectively.View Full Paper PDF
