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

Author

Listed:
  • 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))

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.

Suggested Citation

  • Bastié Françoise & Cieply Sylvie & Cussy Pascal, 2011. "The Survival of New Firms: Do Bank Loans at Birth Matter?," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201110, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  • Handle: RePEc:tut:cremwp:201110
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    More about this item

    Keywords

    Survival; New firms; Banking debt; Screening; Duration.;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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