Bank Entrepreneurs

This paper provides the first analysis of entrepreneurs chartering deposit-insured banks in the U.S. By merging hand-collected biographical data on directors of De Novo banks with detailed call reports, we directly connect entrepreneurial characteristics to corporate policy and firm outcomes. First, we find strong evidence that bank directors are driven by local opportunities, bring significant banking and managerial experience, have the networks necessary to raise local funding, and extend past lending practices. Second, to better identify the value of the individual entrepreneur, we confirm that a new bank’s lending policies are highly predicted by the lending policies of the CEO’s prior bank. Exploiting these correlated lending strategies, we illustrate the CEO has a causal effect on the performance of the bank, as well as the likelihood of survival and outcomes.