| By: |
Laura Alfaro;
Andrew Charlton |
| Abstract: |
We explore the relation between international financial integration and the
level ofentrepreneurial activity in a country. Using a unique data set of
approximately 24 million firmsin nearly 100 countries in 1999 and 2004, we
find suggestive evidence that internationalfinancial integration has been
associated with higher levels of entrepreneurial activity. Ourresults are
robust to using various proxies for entrepreneurial activity such as entry,
size, andskewness of the firm-size distribution; controlling for level of
economic development,regulation, institutional constraints, and other
variables that might affect the businessenvironment; and using different
empirical specifications. We further explore various channelsthrough which
international financial integration can affect entrepreneurship (a foreign
directinvestment channel and a capital/credit availability channel) and
provide consistent evidence tosupport our results. |
| Keywords: |
international financial integration, capital mobility, entrepreneurship, firm entry,capital controls, foreign direct investment |
| JEL: |
F21 F23 F35 G15 G18 O19 |
| Date: |
2006–10 |
| URL: |
https://d.repec.org/n?u=RePEc:cep:cepdps:dp0755 |