International financial integration and entrepreneurship

Laura Alfaro and Andrew Charlton

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We explore the relation between international financial integration and the level of entrepreneurial activity in a country. Using a unique data set of approximately 24 million firms in nearly 100 countries in 1999 and 2004, we find suggestive evidence that international financial integration has been associated with higher levels of entrepreneurial activity. Our results are robust to using various proxies for entrepreneurial activity such as entry, size, and skewness of the firm-size distribution; controlling for level of economic development, regulation, institutional constraints, and other variables that might affect the business environment; and using different empirical specifications. We further explore various channels through which international financial integration can affect entrepreneurship (a foreign direct investment channel and a capital/credit availability channel) and provide consistent evidence to support our results.

Keywords: international financial integration; capital mobility; entrepreneurship; firm entry; capital controls; foreign direct investment (search for similar items in EconPapers)
JEL-codes: F21 F23 F35 G15 G18 O19 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2006-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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http://eprints.lse.ac.uk/19796/ Open access version. (application/pdf)

Related works:
Working Paper: International Financial Integration and Entrepreneurship (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:19796

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