Abstract
Although a sizeable literature has examined the impact of income diversification on risk and return, the implication of banks diversification on entrepreneurial activities has not yet been studied. Using state-level data for the US spanning the period 1977-2014, the present study examines the impact of banks asset, income and funding diversification on different facets of entrepreneurial activities. We find banks asset and funding diversification to promote net business formation and net job creation. Additionally, bank profitability, deposit growth, as well as state-level personal income and housing price growth foster entrepreneurship.
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