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Financial constraints on new firms: Looking for regional disparities

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Author Info
Jean Bonnet () (University of Caen, Faculty of Economics and Business Administration)
Sylvie Cieply () (University of Caen, Faculty of Economics and Business Administration)
Marcus Dejardin () (University of Namur, CREW, Faculty of Economics, Social Sciences and Business Administration)

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Abstract

Financial constraints affecting new firms are some of the factors most cited for impeding entrepreneurial dynamics from flourishing. This article introduces the problem of regional patterns of financial constraints. The research is conducted with regard to the French regions and the new French firms being tracked at the firm level. It refers to entrepreneurial projects that are concretized in new firms. General entrepreneurial intentions in the French population that are aborted due to financial constraints are not reported. The point is of importance as the firm financing conditions are considered. First, an assessment of the regional banking activity leads to the conclusion of a relatively homogeneous situation, the activity in the core-region Île-de-France appearing however more contrasted. Second, the financial constraints affecting new firms are distinguished according to a four-case typology of credit rationing. It appears, inter alia, that a majority of firms is not facing credit rationing, but also that a non-negligible share is “self-constrained”. The classification is, third and finally, differentiated according to the regions. Despite the relatively homogeneous banking supply, some differences may still be at work. The explanations are hypothetical at this stage but evidence suggests that the regional dimension should definitely deserve further attention.

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Publisher Info
Article provided by Editions du DULBEA, Université libre de Bruxelles, Department of Applied Economics (DULBEA) in its journal Brussels Economic Journal/Cahiers Economiques de Bruxelles.

Volume (Year): 48 (2005)
Issue (Month): 3 ()
Pages: 217-245
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Handle: RePEc:bxr:bxrceb:y:2005:v:48:i:3:p:217-245

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Related research
Keywords: Financial constraints Credit rationing New Firms Regional Disparities

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Find related papers by JEL classification:
G20 - Financial Economics - - Financial Institutions and Services - - - General
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

This item is featured on the following reading lists:

  1. Socio-Economics of Innovation
References listed on IDEAS
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  17. Sharpe, Steven A, 1990. " Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships," Journal of Finance, American Finance Association, vol. 45(4), pages 1069-87, September. [Downloadable!] (restricted)
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