Democratizing entry
Subtitle: banking deregulations, financing constraints, and entrepreneurship
By: William Kerr, Ramana Nanda
Contributors: Nanda, Ramana; Harvard Business School
Edition: 3rd rev.
Series: Working paper / Harvard Business School -- 07-033; Working paper (Harvard Business School) -- 07-033
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston]
Number of pages: 24
Description: 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.
Notes: "October 2008"--Added t.p.

First published as: Banking deregulation, financing constraints and entrepreneurship. 16 December 2006. First revision published: 10 July 2007. Second revision published: 12 December 2007.

Includes bibliographical references.