Banking Structure and Employment Growth

Recent studies have documented an association between financial structure and growth of per capita income. The relationship between financial structure and job growth, by contrast, is an unexplored issue of independent interest. Here we find that U.S. nonmetropolitan employment grew faster in 1973-1996 where there were fewer locally owned bank offices and a more concentrated initial banking market structure; these linkages were less stable in metropolitan areas. In addition, controlling for employment growth does not undermine the empirical linkage between initial bank structure and subsequent per capita income growth