increases (decreases) both the volume and riskiness of innovation. Using staggered banking deregulation by U.S. states as shocks … to the bargaining power of banks, we find that, consistent with our hypotheses, inter-state banking deregulation … increased both the level and riskiness of innovation by young private firms while intra-state deregulation decreased them …

financial sector deregulation affects economic growth. We find that intrastate banking deregulation, which increased the local … deregulation, which decreased the local market power of banks, increased the level and risk of innovation by young, private firms … the nature of financial sector deregulation crucially affects its potential benefits to the real economy …