Title: Bank integration and financial constraints
First published: 2008
Description: "This paper uses data on publicly-traded firms in the U.S.  to analyze the effect of interstate bank integration on the financial constraints borrowers face.  A firm-level investment equation is estimated in order to test if bank integration reduces the sensitivity of capital expenditures to the level of internal funds.  The staggered deregulation of cross-state bank acquisitions that took place in the U.S.  between 1978 and 1994 helps estimate the model.  Integration decreases financing constraints for bank-dependent firms.  The change in firms' access to external finance is explained by an increase in the share of locally headquartered geographically diversified banks"--Federal Reserve Board web site.
LC classification: HG3879