The Duration of New Firms in Banking : An Application of Cox Regression Analysis

This paper studies the duration of two cohorts of entrants in the Italian financial intermediation industry. Using the Cox (1972) Proportional Hazards Model, it analyzes the link between duration of each newborn firm and its start-up size, as well as a series of industry-specific characteristics. It emerges that not only did regulatory reform in 1990 result in a process of branch proliferation and industry concentration, but it also set in motion a pre-entry selection mechanism. Conversely, before completion of the regulatory reform, in 1989, entry was possible even for very small firms, and larger new entrants survived longer than their smaller counterparts, and this independently of the features of spatial and structural competition