BANK STRUCTURE AND NEW BUSINESS CREATION LESSONS FROM AN EARLIER TIME

This paper examines the relationship between bank structure and the bi rth and growth of new manufacturing firms. It also extends and tests a path-dependent model of new firm creation that incorporates an agglom eration hypothesis. The results indicate that the rates of birth and g rowth of new manufacturing firms are negatively related to average ban k size and the presence of interest rate ceilings, and positively asso ciated with the degree of local bank concentration. The results also c onfirm the agglomeration and path-dependent hypotheses.