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Financial Constraints on New Firms:Looking for Regional Disparities

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Author Info
Jean Bonnet () (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université Rennes I - Université de Caen)
Sylvie Cieply (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université Rennes I - Université de Caen)
Marcus Dejardin (CREW - Centre de Recherche sur l'Economie Wallonne - Facultés Universitaires Notre Dame de la Paix Namur)

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Abstract

Financial constraints affecting new firms are some of the factors most cited forimpeding entrepreneurial dynamics from flourishing. This article introduces the problem ofregional patterns of financial constraints. The research is conducted with regard to the Frenchregions and the new French firms being tracked at the firm level. It refers to entrepreneurialprojects that are concretized in new firms. General entrepreneurial intentions in the Frenchpopulation that are aborted due to financial constraints are not reported. The point is ofimportance as the firm financing conditions are considered. First, an assessment of theregional banking activity leads to the conclusion of a relatively homogeneous situation, theactivity in the core-region Île-de-France appearing however more contrasted. Second, thefinancial constraints affecting new firms are distinguished according to a four-case typologyof 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 andfinally, differentiated according to the regions. Despite the relatively homogeneous bankingsupply, some differences may still be at work. The explanations are hypothetical at this stage butevidence suggests that the regional dimension should definitely deserve further attention.

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Date of creation: 21 Apr 2006
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Related research
Keywords: Financial constraints; Credit rationing; New Firms; Regional Disparities;

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This item is featured on the following reading lists:
  1. Socio-Economics of Innovation
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.:
  1. 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. [Downloadable!] (restricted)
    Other versions:
  2. 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). [Downloadable!]
  3. Jan Bouckaert & Hans Degryse, 2004. "Softening Competition by Inducing Switching in Credit Markets," Journal of Industrial Economics, Blackwell Publishing, vol. 52(1), pages 27-52, 03. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. Wall, Howard J., 2004. "Entrepreneurship and the deregulation of banking," Economics Letters, Elsevier, vol. 82(3), pages 333-339, March. [Downloadable!] (restricted)
  6. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June. [Downloadable!] (restricted)
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  7. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-86, June. [Downloadable!] (restricted)
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  8. 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. [Downloadable!]
  9. Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, vol. 57(6), pages 2533-2570, December. [Downloadable!] (restricted)
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  10. 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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  11. 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. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
  13. 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. [Downloadable!] (restricted)
  14. Brian Ashcroft & James Love & Eleanor Malloy, 1991. "New Firm Formation in the British Counties with Special Reference to Scotland," Regional Studies, Taylor and Francis Journals, vol. 25(5), pages 395-409, October. [Downloadable!] (restricted)
  15. 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_v1, HAL. [Downloadable!]
  16. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2002. "Does Local Financial Development Matter?," CEPR Discussion Papers 3307, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  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. [Downloadable!] (restricted)
  18. Robert Marquez, 2002. "Competition, Adverse Selection, and Information Dispersion in the Banking Industry," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 15(3), pages 901-926.
  19. Robert Hauswald & Robert Marquez, 2003. "Information Technology and Financial Services Competition," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 16(3), pages 921-948, July. [Downloadable!] (restricted)
  20. Bernard Guesnier, 1994. "Regional Variations in New Firm Formation in France," Regional Studies, Taylor and Francis Journals, vol. 28(4), pages 347-358, July. [Downloadable!] (restricted)
  21. Claudia M. Buch, 2001. "Distance and International Banking," Kiel Working Papers 1043, Kiel Institute for the World Economy. [Downloadable!]
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  22. Hans Degryse & Steven Ongena, 2005. "Distance, Lending Relationships, and Competition," Journal of Finance, American Finance Association, vol. 60(1), pages 231-266, 02. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Regional Economic Growth: Towards A General Theory of Start-Ups," Working Papers RP2008/70, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Structural Economic Transformation," Working Papers RP2008/62, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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