Bank Loans, Start-Up Subsidies and the Survival of the New Firms: An Econometric Analysis at the Entrepreneur Level

University of Paris I Working Paper No. 2003.77

48 Pages Posted: 24 Jul 2003

See all articles by Bruno Crepon

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); IZA Institute of Labor Economics

Emmanuel Duguet

ERUDITE

Date Written: 2003

Abstract

We evaluate the impact of bank loans and start-up subsidies on the survival of the new firms. This work relies on the SINE94 survey that provides rich information on the entrepreneurs and their start-up projects. We use the propensity score matching methodology, in the case of multiple treatments, in order to evaluate the difference between the survival function the new firms have with their funding and the survival function they would have had with a different funding. We reach three conclusions. First, start-up subsidies increase significantly the survival of the firms created by former unemployed people, while they have no effect on the survival of the firms created by former employed people. Second, the allocation of subsidies acts like a screening process that improves on the performances of the bank loans. Third, the effect of subsidies is stronger than the effect of the bank loans because the former funding is attributed to a larger number of recipients.

Keywords: Bank loan, propensity score, matching, unemployment, start-up, policy evaluation, self-employment, subsidy, entrepreneur

JEL Classification: C14, D21, D92, J23

Suggested Citation

Crepon, Bruno and Duguet, Emmanuel, Bank Loans, Start-Up Subsidies and the Survival of the New Firms: An Econometric Analysis at the Entrepreneur Level (2003). University of Paris I Working Paper No. 2003.77. Available at SSRN: https://ssrn.com/abstract=421921 or http://dx.doi.org/10.2139/ssrn.421921

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Emmanuel Duguet (Contact Author)

ERUDITE ( email )

Mail des Mèches
61 avenue du Général de Gaulle
Créteil Cedex, 94010
France

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