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

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Economic Development and Financial Markets

Part of the book series: Contributions to Economics ((CE))

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.

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Acknowledgements

This work was supported by a grant of the Alexandru Ioan Cuza University of Iasi, within the Research Grants program, Grant UAIC, code GI-UAIC-2017-02.

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Authors and Affiliations

  1. Institute of Interdisciplinary Research, Social Sciences and Humanities Research Department, Alexandru Ioan Cuza University of Iasi, Lascar Catargi Street, No. 54, 700107, Iasi, Romania

    Valentina Diana Rusu

  2. Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Carol I Blvd, No. 22, 700505, Iasi, Romania

    Angela Roman

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  1. Valentina Diana Rusu
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Correspondence to Valentina Diana Rusu .

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Editors and Affiliations

  1. Department of Risk and Insurance, Warsaw School of Economics, Warsaw, Poland

    Adam Śliwiński

  2. Department of Economics, International Hellenic University, Serres, Greece

    Persefoni Polychronidou

  3. Department of Accounting and Finance, International Hellenic University, Kavala, Greece

    Anastasios Karasavvoglou

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Rusu, V.D., Roman, A. (2020). Starting New Business and Access to Finance: A Panel Data Investigation. In: Śliwiński, A., Polychronidou, P., Karasavvoglou, A. (eds) Economic Development and Financial Markets . Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-32426-1_7

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