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Starting New Business and Access to Finance: A Panel Data Investigation

In: Economic Development and Financial Markets

Author

Listed:
  • Valentina Diana Rusu

    (Alexandru Ioan Cuza University of Iasi)

  • Angela Roman

    (Alexandru Ioan Cuza University of Iasi)

Abstract

The objective of our paper is to investigate how the access to finance affects the creation of new business in EU, by identifying the relationship between several indicators, measuring the access to finance, the specifics of business environment, and the dynamics of new business creation. Our analysis includes ten indicators and it is covering the period from 2007 to 2016. We use a fixed effect model on panel data for 18 EU countries. The dependent variable is the nascent entrepreneurship rate, which we use as a proxy for the creation of new business. As independent variables, we use indicators expressing the availability of financial resources and measuring the specifics of business environment. We considered also several control variables. Our results highlight that starting new business in EU countries is significantly linked to easy access to finance. Thus, the creation of new business is encouraged when it is easier to obtain financial resources. Also, the characteristics of business environment are indirectly affecting the creation of new business. Our study contributes to completing the literature in the field by providing empirical evidence regarding the effects of access to finance to the start of new business in the EU.

Suggested Citation

  • Valentina Diana Rusu & Angela Roman, 2020. "Starting New Business and Access to Finance: A Panel Data Investigation," Contributions to Economics, in: Adam Śliwiński & Persefoni Polychronidou & Anastasios Karasavvoglou (ed.), Economic Development and Financial Markets, pages 117-131, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-32426-1_7
    DOI: 10.1007/978-3-030-32426-1_7
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