Financial Frictions, Cyclical Fluctuations, and the Growth Potential of New Firms
Christoph Albert () and
Andrea Caggese ()
No 1067, Working Papers from Barcelona Graduate School of Economics
We develop a model in which entrepreneurs choose between startup types with heterogeneous short- and long-run growth potential, and we generate testable predictions on the differential effects of financial factors and cyclical fluctuations on these startups. Using a multi-country entrepreneurship survey, we find that, consistent with the model, higher borrowing costs during financial crises negatively affect high-growth startups considerably more than low-growth startups, especially during severe downturns. Our results, supported by additional tests using sector-level financial frictions indicators, uncover a new channel that is potentially important to explain slow recoveries after financial crises.
Keywords: financial crisis; entrepreneurship (search for similar items in EconPapers)
JEL-codes: E20 E32 D22 J23 M13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-fdg, nep-lma, nep-mac and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Financial frictions, cyclical fluctuations, and the growth potential of new firms (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1067
Access Statistics for this paper
More papers in Working Papers from Barcelona Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().