Department of Economics and Business - Universitat Pompeu Fabra

Title:: Cyclical fluctuations, financial shocks, and the entry of fast-growing entrepreneurial startups
Authors:: Christoph Albert and Andrea Caggese
Date:: December 2018 (Revised: June 2019)
Abstract:: We analyze a multi-year, multi-country entrepreneurship survey with more than one million observations to identify startups with low- and high growth potential, and we confirm the validity of these ex-ante measures with ex post firm-level information on employment growth. We find that negative aggregate financial shocks reduce all startup types, but their effect is significantly stronger for startups with high growth potential, especially when GDP growth is low. Our results uncover a new composition of entry channel that significantly reduces employment growth and is potentially important for explaining slow recoveries after financial crises.
Keywords:: Financial crisis, entrepreneurship
JEL codes:: E20, E32, D22, J23, M13
Area of Research:: Finance and Accounting

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