Lend Me a Hand - Bank Market Power and Firm Creation in Innovative Industries

2020 ◽  
Author(s):  
Fabrizio Core
Keyword(s):  
Market Power ◽  
Firm Creation ◽  
Innovative Industries

Bank market power and firm creation: a multi-country analysis

2016 ◽  
Vol 23 (2) ◽  
pp. 562-589 ◽  
Author(s):  
Mariarosaria Agostino ◽  
Francesco Trivieri
Keyword(s):  
Empirical Evidence ◽  
Market Power ◽  
Market Competition ◽  
International Perspective ◽  
Large Set ◽  
Banking Competition ◽  
Content Type ◽  
Firm Creation ◽  
The Relationship

Purpose – The purpose of this paper is to investigate the relationship between bank market power and firm creation, which represents a debated issue in the economic literature, still lacking empirical evidence. Design/methodology/approach – The analysis is carried out by taking an international perspective, using different measures of banking competition, and controlling for a large set of determinants suggested by the variegate literature on firms’ birth drivers. Findings – The main finding suggests that credit market competition may benefit firms’ creation, as the relationship between the latter and bank market power – when statistically significant – appears to be negative. In addition, the detrimental impact of market power appears greater (in absolute terms) when departing from higher levels of banking competition. Research limitations/implications – The empirical evidence seems supporting the competitive position in the debate on the role of banking competition. Furthermore, the authors reckon that the findings reinforce the belief of a crucial role played by the availability of funds for nascent firms, with evident implications for the policy strategies more appropriate to foster entrepreneurship. The “fashion” followed by several countries of lowering administrative entry barriers (van Stel et al., 2007) needs to be reappraised, pondering also means to enrich resources availability. Originality/value – To the best of the knowledge, the paper is the first one addressing the issue of the role of bank market structure on firms’ creation in a multi-country setting.

Vertical Boilerplate

2017 ◽  
Author(s):  
James Gibson
Keyword(s):  
Market Power ◽  
Real World ◽  
Empirical Work ◽  
Full Scale ◽  
Market Mechanism ◽  
Law School ◽  
Information Cost ◽  
Information Costs ◽  
Policy Proposals ◽  
Radical Solution

Despite what we learn in law school about the “meeting of the minds,” most contracts are merely boilerplate—take-it-or-leave-it propositions. Negotiation is nonexistent; we rely on our collective market power as consumers to regulate contracts’ content. But boilerplate imposes certain information costs because it often arrives late in the transaction and is hard to understand. If those costs get too high, then the market mechanism fails. So how high are boilerplate’s information costs? A few studies have attempted to measure them, but they all use a “horizontal” approach—i.e., they sample a single stratum of boilerplate and assume that it represents the whole transaction. Yet real-world transactions often involve multiple layers of contracts, each with its own information costs. What is needed, then, is a “vertical” analysis, a study that examines fewer contracts of any one kind but tracks all the contracts the consumer encounters, soup to nuts. This Article presents the first vertical study of boilerplate. It casts serious doubt on the market mechanism and shows that existing scholarship fails to appreciate the full scale of the information cost problem. It then offers two regulatory solutions. The first works within contract law’s unconscionability doctrine, tweaking what the parties need to prove and who bears the burden of proving it. The second, more radical solution involves forcing both sellers and consumers to confront and minimize boilerplate’s information costs—an approach I call “forced salience.” In the end, the boilerplate experience is as deep as it is wide. Our empirical work should reflect that fact, and our policy proposals should too.

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