Entry Regulation as a Barrier to Entrepreneurship

Leora Klapper, Luc Laeven and Raghuram Rajan

No 10380, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a comprehensive database of European firms, we study the effect of market entry regulations on the creation of new limited-liability firms, the average size of entrants, and the growth of incumbent firms. We find that costly regulations hamper the creation of new firms, especially in industries that should naturally have high entry. These regulations also force new entrants to be larger and cause incumbent firms in naturally high-entry industries to grow more slowly. Our results hold even when we correct for the availability of financing, the degree of protection of intellectual property, and labor regulations.

JEL-codes: G3 L1 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-ent
Note: CF
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Citations: View citations in EconPapers (81)

Published as Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.

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