IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Microeconomic and Macroeconomic Influences on Entry and Exit of Firms

  • Ilmakunnas, Pekka

    ()

    (Bank of Finland Research, Aalto University School of Economics)

  • Topi, Jukka

    ()

    (Bank of Finland Research)

We examine the entry and exit process in the Finnish manufacturing industry. Microeconomic explanations of entry and exit are derived from industrial organization theory and macroeconomic explanations from the theory of monetary transmission mechanism. Since the variables to be explained, the number of entering and exiting firms, are non-negative integers, we use Poisson and negative binomial models in the estimation. The data is a six year panel of three-digit industries. The results show that scale economies form a significant entry barrier, but the evidence on their role as an exit barrier is weaker. Concentration has a negative impact on entry, but this result is not robust to the choice of estimation method. Industry growth has a positive influence on entry and a negative influence on exit, but also variables describing the general economic climate have an influence on the entry-exit process. The variables describing the monetary transmission mechanism have an expected influence on entry. Credit supply has a positive and real interest rate a negative effect on entry. However, the role of the macroeconomic influences on exit is inconclusive. Past entry has a significant effect on exit, which reflects the displacement of old firms by new ones and the short life expectancy of new firms. Both entry and exit have almost unit elasticity with respect to industry size, measured by the number of firms in the previous period. Entry and exit rates are therefore practically independent of industry size.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/DP_06_1996.pdf
Download Restriction: no

Paper provided by Bank of Finland in its series Research Discussion Papers with number 6/1996.

as
in new window

Length: 36 pages
Date of creation: 04 Mar 1996
Date of revision:
Handle: RePEc:hhs:bofrdp:1996_006
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/

More information through EDIRC

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.:

as in new window
  1. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  2. Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
  3. Fotopoulos, Georgios & Spence, Nigel, 1997. " Net Entry of Firms into Greek Manufacturing: The Effects of Business Conditions," Small Business Economics, Springer, vol. 9(3), pages 239-53, June.
  4. repec:cup:cbooks:9780521633574 is not listed on IDEAS
  5. Gertler, M. & Gilchrist, S., 1993. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," Working Papers 93-02, C.V. Starr Center for Applied Economics, New York University.
  6. Anil Kashyap & Jeremy C. Stein, 1993. "Monetary Policy and Bank Lending," NBER Working Papers 4317, National Bureau of Economic Research, Inc.
  7. Johnson, Peter & Parker, Simon, 1994. " The Interrelationships between Births and Deaths," Small Business Economics, Springer, vol. 6(4), pages 283-90, August.
  8. Shapiro, Daniel & Khemani, R. S., 1987. "The determinants of entry and exit reconsidered," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 15-26, March.
  9. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
  10. repec:cup:cbooks:9780521465618 is not listed on IDEAS
  11. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hhs:bofrdp:1996_006. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Minna Nyman)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.