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Does Initial Access To Bank Loans Predict Start‐Ups' Future Default Probability? Evidence From Italy

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  • Angelo Castaldo
  • Giuliana De Luca
  • Berardino Barile

Abstract

In Europe, several countries have established public loan guarantee funds throughout direct/indirect loan programs to facilitate the access of SMEs and start‐ups to bank credit. This paper investigates whether start‐ups' level of access to bank loans during the early stage represents an imprinting factor with effects on the likelihood of survival once the firm reaches maturity. We rely on a firm‐level longitudinal data set of 49,111 Italian startups born from 2003 to 2005. Implementing a 2SLS regression analysis we show that the initial level of start‐up bank debt negatively influences the probability of default controlling for firm characteristics and performance. (JEL G21, M20, H32)

Suggested Citation

  • Angelo Castaldo & Giuliana De Luca & Berardino Barile, 2021. "Does Initial Access To Bank Loans Predict Start‐Ups' Future Default Probability? Evidence From Italy," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 83-106, January.
    • Handle: RePEc:bla:coecpo:v:39:y:2021:i:1:p:83-106
    DOI: 10.1111/coep.12480
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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