Advanced Search
MyIDEAS: Login to save this paper or follow this series

Financial Constraints on New Firms: Looking for Regional Disparities

Contents:

Author Info

  • Jean Bonnet
  • Marcus Dejardin
  • Sylvie Cieply

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. As regard to new firms, the research relies mainly on the use of the Information System on New Firms (SINE) that is released by the French National Institute of Statistical and Economic Studies (INSEE). The SINE dataset does not refer to the general entrepreneurial intention in the French population but to entrepreneurial projects that are concretized in new firms. As a consequence, entrepreneurial intentions 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 global situation of the banking density and activity within and between the French regions leads to the conclusion of a relatively homogeneous banking supply and banking activity, with the activity of 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. Additionally to the "no credit rationing" situation, "weak" or "strong credit rationing" are distinguished from the "self-constraint" situation, a situation describing the case when firms do not ask for a bank loan although they declare facing financial constraints subsequently. It appears that a majority of new 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 relative homogeneity of the banking supply, it appears that some regional differences may still be at work. The given explanations are still hypothetical at this stage but the empirical results suggest already that the regional dimension should definitely deserve further attention.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://papers.econ.mpg.de/egp/discussionpapers/2005-37.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2005-37.

as in new window
Length: 25 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:esi:egpdis:2005-37

Contact details of provider:
Postal: Kahlaische Strasse 10, D-07745 Jena
Phone: +49-3641-68 65
Fax: +49-3641-68 69 90
Web page: http://www.econ.mpg.de/
More information through EDIRC

Order Information:
Email:
Web: http://www.econ.mpg.de/english/research/EGP/discuss.php

Related research

Keywords: Financial constraints; Credit rationing; New Firms; Regional Disparities;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Degryse, H.A. & Ongena, S., 2003. "Distance, Lending Relationships, and Competition," Discussion Paper 2003-123, Tilburg University, Center for Economic Research.
  2. Hellmann, Thomas & Stiglitz, Joseph, 2000. "Credit and equity rationing in markets with adverse selection," European Economic Review, Elsevier, vol. 44(2), pages 281-304, February.
  3. Rafik Abdesselam & Jean Bonnet & Nicolas Le Pape, 2004. "An Explanation of the Life Span of New French Firms," Small Business Economics, Springer, vol. 23(3), pages 237-254, October.
  4. Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  5. Rafik Abdesselam & Jean Bonnet & Nicolas Le Pape, 2004. "Les contraintes de la création et de la reprise d'entreprise : une application aux régions françaises," Post-Print hal-00149382, HAL.
  6. Steven A. Sharpe, 1989. "Asymmetric information, bank lending, and implicit contracts: a stylized model of customer relationships," Finance and Economics Discussion Series 70, Board of Governors of the Federal Reserve System (U.S.).
  7. Carling , Kenneth & Lundberg, Sofia, 2002. "Bank Lending, Geographical Distance, and Credit risk: An Empirical Assessment of the Church Tower Principle," Working Paper Series 144, Sveriges Riksbank (Central Bank of Sweden).
  8. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
  9. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "Does Local Financial Development Matter?," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 929-969, August.
  10. Robert Marquez, 2002. "Competition, Adverse Selection, and Information Dispersion in the Banking Industry," Review of Financial Studies, Society for Financial Studies, vol. 15(3), pages 901-926.
  11. Sandra E. Black & Philip E. Strahan, 2002. "Entrepreneurship and Bank Credit Availability," Journal of Finance, American Finance Association, vol. 57(6), pages 2807-2833, December.
  12. Mayer, Colin, 1987. "New Issues in Corporate Finance," CEPR Discussion Papers 181, C.E.P.R. Discussion Papers.
  13. Mitchell A. Petersen & Raghuram G. Rajan, 2000. "Does Distance Still Matter? The Information Revolution in Small Business Lending," NBER Working Papers 7685, National Bureau of Economic Research, Inc.
  14. Wall, Howard J., 2004. "Entrepreneurship and the deregulation of banking," Economics Letters, Elsevier, vol. 82(3), pages 333-339, March.
  15. Robert Hauswald & Robert Marquez, 2003. "Information Technology and Financial Services Competition," Review of Financial Studies, Society for Financial Studies, vol. 16(3), pages 921-948, July.
  16. Claudia M. Buch, 2005. "Distance and International Banking," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 787-804, 09.
  17. Rajan, Raghuram G, 1992. " Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, vol. 47(4), pages 1367-400, September.
  18. Jan Bouckaert & Hans Degryse, 2004. "Softening Competition by Inducing Switching in Credit Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 27-52, 03.
  19. Nicolas Le Pape & Sylvie Cieply & Rafik Abdesselam, 2002. "Les facteurs de différentiation des banquiers mutualistes et commerciaux en matière de financement des PME," Revue d'Économie Financière, Programme National Persée, vol. 67(3), pages 121-131.
  20. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  21. Jayaratne, Jith & Strahan, Philip E, 1996. "The Finance-Growth Nexus: Evidence from Bank Branch Deregulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 639-70, August.
  22. Marcelline Grondin & Sylvie Cieply, 1999. "Expertise et contrôle des risques - PME par le chargé de clientèle entreprises : une alternative au rationnement," Revue d'Économie Financière, Programme National Persée, vol. 54(4), pages 59-78.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Jean Bonnet & Sylvie Cieply & Marcus Dejardin, 2011. "Does the regional dimension matter as regards finance and entrepreneurship?," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201127, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  2. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Structural Economic Transformation," Working Paper Series RP2008/62, World Institute for Development Economic Research (UNU-WIDER).
  3. repec:hal:wpaper:halshs-00467900 is not listed on IDEAS
  4. Gries Thomas & Naude Wim, 2011. "Entrepreneurship, Structural Change and a Global Economic Crisis," Entrepreneurship Research Journal, De Gruyter, vol. 1(3), pages 1-43, July.
  5. repec:hal:cesptp:halshs-00467900 is not listed on IDEAS
  6. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Regional Economic Growth: Towards A General Theory of Start-Ups," Working Paper Series RP2008/70, World Institute for Development Economic Research (UNU-WIDER).
  7. Juan A. Máñez & María E. Rochina-Barrachina & Juan A. Sanchis-Llopis & Oscar Vicente, 2013. "Financial constraints and Spanish manufacturing firms’ R&D and exporting," Working Papers 1324, Department of Applied Economics II, Universidad de Valencia.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Socio-Economics of Innovation

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:esi:egpdis:2005-37. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kerstin Schück).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.