nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒06‒22
four papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. The Growth Potential of Startups over the Business Cycle By Petr Sedlacek; Vincent Sterk
  2. Does bank market power affect SME financing constraints? By Ryan, Robert M.; O'Toole, Conor M.; McCann, Fergal
  3. Peer-to-peer lending to small businesses By Mach, Traci L.; Carter, Courtney M.; Slattery, Cailin R.
  4. Gender differences in competitive preferences: new cross-country empirical evidence By Werner Bönte

  1. By: Petr Sedlacek (Rheinische Friedrich-Wilhelms-Universität Bonn (University of Bonn), Wirtschaftswissenschaftlicher Fachbereich (Economics Department), Bonn Graduate School of Economics); Vincent Sterk (Centre for Macroeconomics (CFM))
    Abstract: This paper shows that job creation of cohorts of U.S. firms is strongly infl uenced by aggregate conditions at the time of their entry. Using data from the Business Dynamics Statistics (BDS) we follow cohorts of young firms and document that their employment levels are very persistent and largely driven by the intensive margin (average firm size) rather than the extensive margin (number of firms). To differentiate changes in the composition of startup cohorts from post-entry choices and to evaluate aggregate effects, we estimate a general equilibrium firm dynamics model using BDS data. We find that even for older firms, the aggregate state at birth drives the vast majority of variations in employment across cohorts of the same age. The key force behind this result are fl uctuations in the composition of startup cohorts with respect to firms' potential to grow large. At the aggregate level, factors determined at the startup phase account for the large low-frequency fl uctuations observed in the employment rate.
    Keywords: Firm Dynamics, Heterogeneous Agents, Maximum Likelihood, DSGE
    JEL: E32 D22 L11 M13
    Date: 2014–02
  2. By: Ryan, Robert M. (Central Bank of Ireland); O'Toole, Conor M. (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland)
    Abstract: This paper examines the extent to which bank market power alleviates or magnifies SME credit constraints using a large panel dataset of more than 118,000 SMEs across 20 European countries over the period 2005-2008. To our knowledge, this is the first study to examine bank market power and SME credit constraints in an international, developed economy setting. More- over, our study is the first to address a number of econometric considerations simultaneously, in particular by controlling for the availability of profitable investment opportunities using a structural Q model of investment. Our results strongly support the market power hypothesis, namely, that increased market power results in increased financing constraints for SMEs. Ad- ditionally, we find that the relationship exhibits heterogeneity across firm size and opacity in a manner that suggests that the true relationship between bank market power and financing constraints might not be fully explained by the existing theory. Finally, we find that the effect of bank market power on financing constraints increases in financial systems that are more bank dependent.
    Keywords: Bank Competition, Bank Concentration, Financing Constraints, Tobin's Q, Firmlevel Investment
    JEL: G21 G31 G32 F34
    Date: 2014–02
  3. By: Mach, Traci L. (Board of Governors of the Federal Reserve System (U.S.)); Carter, Courtney M. (Board of Governors of the Federal Reserve System (U.S.)); Slattery, Cailin R. (University of Pennsylvania)
    Abstract: The current paper examines loan-level data from Lending Club to look at peer-to-peer borrowing by small businesses. We begin by looking at characteristics of loan applications that were and were not funded and then take a more in-depth look at funded applications. Summary statistics show an increasing number of small business loan applications over time. Beginning in 2010—when consistent measures of loan purpose were recorded for all applications--loan applications for small businesses were on average less likely than loans for other purposes to have been funded. However, logistic regression results that control for the quality of the application show that, holding all else constant, applications for a loan for a small business were almost twice as likely to have been funded than loans for other purposes. Focusing on funded applications, we note that funded business loans were slightly larger on average than loans funded for other purposes but paid similar interest rates. However, relative to small business loans from traditional sources, peer-to-peer small business borrowers paid an interest rate that was about two times higher. Regression results that control for application quality show that peer-to-peer loans for small businesses were charged almost a percentage point interest rate premium over non-business loans. Logistic regression results that look at loan performance indicate that loans for small businesses were much more likely to be delinquent or charged off.
    Keywords: Peer-to-peer lending; small business; alternative small business borrowing; lending club
    Date: 2014–01–01
  4. By: Werner Bönte (Schumpeter School of Business and Economics, Jackstädt Center of Entrepreneurship and Innovation Research, University of Wuppertal)
    Abstract: This paper provides new empirical evidence on gender differences in competitive preferences using a representative data set of more than 25000 individuals from 36 countries. The empirical results show that the gender differences in competitive preferences are statistically significant in almost all countries with women having, on average, a lower preference for competitive situations than men. Although relatively substantial in most countries, the magnitude of gender differences varies considerably between countries. Results of a regression analysis suggest that the gender differences persist even when controlling for a number of potentially relevant variables. Furthermore, gender differences among adult men and women are hardly affected by the stage of life cycle.
    Date: 2014–06

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