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The Survival of New Firms: Do Bank Loans at Birth Matter?

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  • Bastié Françoise

    (University of Caen Basse-Normandie, CREM (UMR CNRS))

  • Cieply Sylvie

    (University of Caen Basse-Normandie, CREM (UMR CNRS))

  • Cussy Pascal

    (University of Caen Basse-Normandie, CREM (UMR CNRS))

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    Abstract

    In this article, we explore the issue of whether the financial conditions into which a firm is born have an effect on its survival chances. After both correction of the omitted variables bias and introduction of time varying covariates, we show two distinctive effects of banking debt on the survival of new firms in function of the time horizon: an insignificant or negative impact of banking debt in the short term (less than 2 years) and a persistently positive effect in the medium term (more than 2 years). Founding financial conditions have long-lasting effects upon survival.

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    Bibliographic Info

    Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201110.

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    Date of creation: Sep 2011
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    Handle: RePEc:tut:cremwp:201110

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    Postal: CREM (UMR CNRS 6211) – Faculty of Economics, 7 place Hoche, 35065 RENNES Cedex
    Phone: 02 23 23 35 47
    Fax: (33) 2 23 23 35 99
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    Web page: http://crem.univ-rennes1.fr/
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    Postal: CREM (UMR CNRS 6211) - Faculty of Economics, 7 place Hoche, 35065 Rennes Cedex - France
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    Related research

    Keywords: Survival; New firms; Banking debt; Screening; Duration.;

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    References

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