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Publications
Publications
  • 2006
  • Working Paper
  • HBS Working Paper Series

Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship

By: William R. Kerr and Ramana Nanda
  • Format:Print
  • | Language:English
  • | Pages:41
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Abstract

We examine entrepreneurship and creative destruction following US banking deregulations using Census Bureau data. US banking reforms brought about exceptional growth in both entrepreneurship and business closures. The vast majority of closures, however, were the new ventures themselves. Although we do find evidence for the standard story of creative destruction, the most pronounced impact was a massive increase in churning among new entrants. We argue that creative destruction requires many business failures along with the few great successes. The successes are very difficult to identify ex ante, which is why democratizing entry is an important trait of well-functioning capital markets.

Keywords

Business Exit or Shutdown; Market Entry and Exit; Capital Markets; Entrepreneurship; Outcome or Result; Business Startups; Banks and Banking; Banking Industry; United States

Citation

Kerr, William R., and Ramana Nanda. "Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship." Harvard Business School Working Paper, No. 07-033, December 2006. (Revised July 2007, December 2007, October 2008, December 2008.)
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About The Authors

William R. Kerr

Entrepreneurial Management
→More Publications

Ramana Nanda

Entrepreneurial Management
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More from the Authors
  • When Scenario Planning Fails By: Kalle Heikkinen, William R. Kerr, Mika Malin, Panu Routila and Eemil Rupponen
  • Independent Governance of Meta’s Social Spaces: The Oversight Board By: Jesse M. Shapiro, Natalia Rigol, Benjamin N. Roth and William R. Kerr
  • Migration Fear and Minority Crowd-Funding Success: Evidence from Kickstarter By: John (Jianqui) Bai, William R. Kerr, Chi Wan and Alptug Yorulmaz
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