Does IT Help? Information Technology in Banking and Entrepreneurship

We provide novel evidence on the importance of information technology (IT) in banking for entrepreneurship. We establish that job creation by young firms is stronger in US counties more exposed to IT-intensive banks. We present evidence consistent with banks' IT adoption facilitating entrepreneurship by improving banks' use of hard information, in particular collateral. At the county level, entrepreneurship increases by more in IT-exposed counties when house prices rise. Bank-level regressions confirm that banks' IT makes credit supply more responsive to changes in house prices, and that it reduces the importance of geographical distance between borrowers and lenders