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Financial constraints on new firms: looking for regional disparities

  • Jean Bonnet
  • Sylvie Cieply
  • Marcus Dejardin

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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Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 48 (2005)
Issue (Month): 3 ()
Pages: 217-246

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Handle: RePEc:bxr:bxrceb:y:2005:v:48:i:3:p:217-245
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