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Bank branches and Entrepreneurship

Time: Tue 2019-10-15 10.00

Location: Bora Bora, Teknikringen 10B, Stockholm (English)

Subject area: Business Studies

Doctoral student: Cynthia Sin Tian Ho , Bank och finans

Opponent: Associate Professor Mikaela Backman, Jönköping International Business School

Supervisor: Professor Björn Berggren, Bank och finans

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The purpose of this thesis is to analyse how bank branch closure has affected the formation of new firms and to explore the varying local relationships between the accessibility of bank branches and new firm formation in 290 Swedish municipalities. In the first paper, the effect of bank branch closure is examined through spatial econometric analysis, in particular, the fixed effects and the random effects spatial panel models. The findings of the first paper show that an increase in the weighted distance to the nearest bank branches due to bank branch closure negatively affects new firm formation, based on the random effects spatial panel model. The analysis also shows that spatial effects should be included in the analysis due to spill-over effects from neighbouring municipalities. In the second paper, the varying relationships between new firm formation and its determinants in 290 Swedish municipalities are examined through Geographically weighted regression (GWR). Mostly positive relationships with new firm formation are shown for firm density, human capital level, industry diversification level and percentage of immigrants living in the area. In contrast, mostly negative relationships are shown for weighted mean distance to the nearest bank branches, establishment size, unemployment rate, industry specialization. Spatially constrained multivariate clustering is also applied to group municipalities with similar conditions. Patterns in the industry composition and the location attributes are analysed for each cluster.