The Effect of Systemic Banking Crises on Entrepreneurship

Jordi Paniagua () and Juan Sapena
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Juan Sapena: Catholic University of Valencia “San Vicente Mártir” (UCV)

Chapter Chapter 14 in New Challenges in Entrepreneurship and Finance, 2015, pp 195-207 from Springer

Abstract: Abstract Economic crises have mixed effects on entrepreneurship. Through demand shocks, credit constraints, and unemployment, systemic banking crises affect the rate of start-up business creation, although the extent of their impact varies. Consequently, previous studies on the effect of crises on Entrepreneurship are inconclusive. The surge of global demand coupled with low credit availability reduces the prospects for new businesses. On the other hand, job losses caused by an economic crisis might lead many entrepreneurs to undertake new projects. These inconsistent conclusions highlight the need for more studies that explore the effect of systemic banking crises on entrepreneurship. This article presents analysis of a global panel database consisting of data on new business activity and density for 106 countries during 2004–2012. A range of regression techniques yielded robust results that show that systemic banking crises have a consistently negative impact on entrepreneurship.

Keywords: Foreign Direct Investment; Gross Domestic Product; Systemic Banking; Entrepreneurial Activity; Quantile Regression (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-319-08888-4_14

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DOI: 10.1007/978-3-319-08888-4_14

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