Reference : Long-term finance and entrepreneurship
E-prints/Working papers : First made available on ORBilu
Business & economic sciences : Finance
Entrepreneurship and Innovation / Audit
http://hdl.handle.net/10993/34334
Long-term finance and entrepreneurship
English
Leon, Florian mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Jan-2018
37
No
[en] Long-term finance ; Banks ; Entrepreneurship
[en] This paper investigates whether long-term finance affects the firm entry across the world. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector in 85 countries over the period 1995-2014. We then analyze whether differences in entrepreneurship are correlated with the provision of short-term and long-term bank credit. Data on entrepreneurship are extracted from two frequently used databases: the Global Entrepreneurship Monitoring dataset and Entrepreneurship Database, each of which captures different aspects of firm creation. Econometric results indicate that long-term credit does not stimulate the firm entry. On the contrary, we find that short-term credit exerts a positive impact at each stage of firm creation from activity birth to registration. Our findings are robust to a battery of sensitivity tests, including additional control variables, alternative dependent variables,
alternative sample, and changes in econometric specification. Our findings suggest that better provision of short-term credit allows entrepreneurs to apply for a formal loan instead of relying exclusively on informal loans or internal funds, contrary to long-term loans
http://hdl.handle.net/10993/34334
http://orbilu.uni.lu/bitstream/10993/34334/1/L%C3%A9on%202018%20%28Long-Term%20Finance%20and%20Entrepreneurship%29.pdf

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