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Entrepreneurship and Credit Constraints: Evidence from a French Loan Guarantee Program

In: International Differences in Entrepreneurship

  • Claire Lelarge
  • David Sraer
  • David Thesmar

We use information on a French loan guarantee program in order to assess the consequences of credit constraints for new ventures. Loan Guarantee Programs, as implemented in France, are an effective instrument to help young firms grow faster, both in terms of employment and capital. These effects are quite persistent, since they are still significant four years after obtaining the guarantee. Loan guarantees also allow firms to pay cheaper interest rate, but a potential drawback of this policy consists in guaranteed ventures adopting riskier strategies and thus filing more often for bankruptcy. Last, we find no effect, at the industry level, on creation rates.

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This chapter was published in:
  • Josh Lerner & Antoinette Schoar, 2010. "International Differences in Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number lern08-2, June.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8218.
    Handle: RePEc:nbr:nberch:8218
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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    1. Honohan, Patrick, 2010. "Partial credit guarantees: Principles and practice," Journal of Financial Stability, Elsevier, vol. 6(1), pages 1-9, April.
    2. Ben R. Craig & William E. Jackson, III & James B. Thomson, 2005. "SBA-loan guarantees and local economic growth," Working Paper 0503, Federal Reserve Bank of Cleveland.
    3. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
    4. Li, Wenli, 2002. "Entrepreneurship and government subsidies: A general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 26(11), pages 1815-1844, September.
    5. Dennis Glennon & Peter Nigro, 2005. "An Analysis of SBA Loan Defaults by Maturity Structure," Journal of Financial Services Research, Springer, vol. 28(1), pages 77-111, October.
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