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Venture capital in bank - and market - based economies

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    Abstract

    The determinants of venture capital investment have attracted a significant amount of attention from both academics and policymakers. We use a version of the Keuschnigg-Nielsen model for venture-capital-financed projects to condition our analysis on a reasonable set of exogenous variables but we focus on one determinant: financial market structure. The type of financial market structure (bank -or market-based) contributes substantially to explaining differences among countries with respect to the extent of venture capital investments in the initial business stages. We will use the cross country and time series variation from a panel of 19 industrial countries to support the hypothesis that venture capital thrives within market-based financial systems and is confined to an ancillary role in bank-based systems.

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    File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2011/11025.pdf
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    Bibliographic Info

    Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11025.

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    Length: 55 pages
    Date of creation: Apr 2011
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    Handle: RePEc:mse:cesdoc:11025

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    Keywords: Venture capital; financial market structure; local stock markets; panel data.;

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