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Will strangers help you enter? The effect of foreign bank presence on new firm entry

Bermpei, T and Kalyvas, A and Neri, L and Russo, A (2018) 'Will strangers help you enter? The effect of foreign bank presence on new firm entry.' Journal of Financial Services Research. ISSN 0920-8550

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Abstract

We examine the effect of foreign bank presence on new firm entry in 83 economies over the 2005-2013 period. The empirical findings show that foreign bank presence exerts a positive and significant effect on firm entry. This effect subdues in countries with strong creditor rights, while it strengthens in economies with high depth of credit information sharing. In further analysis, we find that the type of credit information sharing provider matters. The positive effect of foreign bank presence on firm entry strengthens in the presence of a private credit bureau, whereas it subdues in the presence of a public credit registry. Finally, we find some evidence that cultural and information sharing distance between home and host economies weakens the positive effect of foreign bank presence on firm entry. In terms of policy, attracting foreign banks while strengthening credit information sharing through private credit bureaus could benefit entrepreneurship in host economies.

Item Type: Article
Uncontrolled Keywords: foreign banks, firm entry, creditor rights, information sharing
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Elements
Date Deposited: 06 Feb 2018 15:33
Last Modified: 08 Feb 2019 02:00
URI: http://repository.essex.ac.uk/id/eprint/21388

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