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Bank loans, start-up subsidies and the survival of the new firms: an econometric analysis at the entrepreneur level

Author

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  • CREPON Bruno

    (CREST)

  • DUGUET Emmanuel

    (EPEE - University of Evry)

Abstract

We evaluate the impact of bank loans and start-up subsidies on the survival of the new firms. This work relies on the SINE94 survey that provides rich information on the entrepreneurs and their start-up projects. We use the propensity score matching methodology, in the case of multiple treatments, in order to evaluate the difference between the survival function the new firms have with their funding and the survival function they would have had with a different funding. We reach three conclusions. First, start-up subsidies increase significantly the survival of the firms created by former unemployed people, while they have no effect on the survival of the firms created by former employed people. Second, the allocation of subsidies acts like a screening process that improves on the performances of the bank loans. Third, the effect of subsidies is stronger than the effect of the bank loans because the former funding is attributed to a larger number of recipients.

Suggested Citation

  • CREPON Bruno & DUGUET Emmanuel, 2004. "Bank loans, start-up subsidies and the survival of the new firms: an econometric analysis at the entrepreneur level," Labor and Demography 0411004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0411004
    Note: Type of Document - pdf; pages: 48
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    References listed on IDEAS

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    Cited by:

    1. Michele Cincera & Lydia Greunz & Jean-Luc Guyot & Olivier Lohest, 2006. "Capital humain et processus de création d'entreprise: le cas des primo-créateurs wallons," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(2).
    2. Dominique Redor, 2017. "Do public subsidies have an impact on start-ups survival rates? An assessment for four cohorts of firms set up by previously unemployed entrepreneurs in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 493, pages 23-42.
    3. Stjepan Srhoj & Bruno Škrinjarić & Sonja Radas, 2021. "Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession," Small Business Economics, Springer, vol. 56(1), pages 83-103, January.
    4. 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 & University of Caen) 201110, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    5. Yuri Ostrovsky & Garnett Picot & Danny Leung, 2019. "The financing of immigrant-owned firms in Canada," Small Business Economics, Springer, vol. 52(1), pages 303-317, January.
    6. Canfei He & Rudai Yang, 2016. "Determinants of Firm Failure: Empirical Evidence from China," Growth and Change, Wiley Blackwell, vol. 47(1), pages 72-92, March.
    7. Oana Calavrezo & Richard Duhautois & Emmanuelle Walkowiak, 2010. "Chômage partiel et disparition des établissements : une analyse à partir de données françaises," Working Papers hal-00831493, HAL.

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    More about this item

    Keywords

    Bank loan; propensity score; matching; unemployment; start-up; policy evaluation; self-employment; subsidy; entrepreneur;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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