We analyze the effect of banking structure and competition on the dynamics of the growth and financing paths of young firms. Rather than looking at the relationship between banking development and firm structure we intend to reverse this relationship and investigate the effect of the (local) banking structure on firm and industry development. We try to investigate the consequences of different degrees of bank competition at the local level as well as of banking structure (the existence of different banking models) at the local level for the dynamics of SME finance and investment. In particular, we look into the impact of banking competition on firm's life time financing, their growth patterns as well as their success rates. We are thereby interested in the development paths of SMEs in general, but of young, most notably newly founded firms in high-tech industries, in particular. By combining the above-mentioned literature we ask to which extent the access to local financing opportunities and different degrees of competition, e.g. lower or higher refinancing rates, can explain different paths. We thereby try to combine the literature on access to finance for small and medium sized firms with the literature on different lending channels, specifically the role of banks, and determinants of the SMEs’ capital structures.