This study investigates how changes in state banking laws affect firms’ access to credit, asset accumulation, and economic performance. Work will focus on manufacturing firms but will also investigate how banking law changes affect other sectors of the economy. The research uses the Quarterly Survey of Plant Capacity (QPC), the Annual Survey of Manufactures (ASM), the Census of Manufactures (CMF), and the Longitudinal Business Database to analyze the effects of banking deregulation on plant-level output, employment, investment, productivity, and capital-to-labor ratios. Further, the project investigates the influence of banking deregulation on the market selection process and the reallocation of resources across manufacturing plants.
The study will also use the Survey of Business Owners and the Integrated Longitudinal Business Database to provide a direct research link between credit markets and the productive sector by identifying firms that use debt to finance startup capital. This will allow the researchers to investigate whether banking deregulation affects access to credit for new businesses or the future performance and asset accumulation of borrowing firms. The research will benefit the Census Bureau by studying the quality of the data in the recently launched QPC. The researchers will compare the data in the QPC to data in the ASM and CMF, in addition to using the QPC (and it predecessor, the annual Survey of Plant Capacity Utilization) to study variation in capacity utilization rates across states. The analysis of capacity utilization variation will be performed in order to evaluate whether the QPC can be used to make inferences at the state level. Finally, this work will benefit the Bureau by producing population estimates of how changes in state banking regulations affect firms’ access to credit and asset accumulation, and how such changes influence the manufacturing sector in terms of the economic performance and input choices of plants, the reallocation of resources, and the market selection process.
Joel Melendez-Lugo
Bent Sorensen