Will Strangers Help you Enter? The Effect of Foreign Bank Presence on New Firm Entry

  • Theodora Bermpei
  • Antonios Nikolaos Kalyvas
  • Lorenzo Neri
  • Antonella Russo
Article
  • 25 Downloads

Abstract

We examine the effect of foreign bank presence on new firm entry in 83 economies over the 2005–2013 period. The empirical findings show that foreign bank presence exerts a positive and significant effect on firm entry. This effect subsides in countries with strong creditor rights, while it strengthens in economies with high depth of credit information sharing. In further analysis, we find that the type of credit information sharing provider matters. The positive effect of foreign bank presence on firm entry strengthens in the presence of a private credit bureau, whereas it is subdued in the presence of a public credit registry. Finally, we find some evidence that cultural and information sharing distance between home and host economies weakens the positive effect of foreign bank presence on firm entry. In terms of policy, attracting foreign banks while strengthening credit information sharing through private credit bureaus could benefit entrepreneurship in host economies.

Keywords

Foreign banks Firm entry Creditor rights Information sharing 

JEL Classification

G21 F23 L26 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Theodora Bermpei
    • 1
    • 2
  • Antonios Nikolaos Kalyvas
    • 3
    • 4
  • Lorenzo Neri
    • 3
    • 5
  • Antonella Russo
    • 3
  1. 1.University of Nottingham TrentNottinghamUK
  2. 2.Finance CentreUniversity of EssexColchesterUK
  3. 3.University of GreenwichLondonUK
  4. 4.Department of Banking and FinanceUniversity of SouthamptonSouthamptonUK
  5. 5.Department of ManagementBirkbeck, University of LondonLondonUK

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