Publication: The Impact of the Business Environment on Young Firm Financing
Loading...
Files in English
850 downloads
Published
2011-10-18
ISSN
1564-698X
Date
2013-05-21
Author(s)
Editor(s)
Abstract
A unique dataset of over 70,000 firms, most of which are small, in over 100 countries, is utilized to systematically study the use of different financing sources for new and young firms. Consistent age-related patterns emerge. Across all countries younger firms rely less on bank financing and more on informal financing. There is a clear substitution effect: as firms mature, more firms switch out of informal finance toward bank finance, while the total proportion of firms using external finance remains relatively unchanged. Importantly, these relationships hold for firms of different sizes, firms in different sectors, and firms located in countries with different income levels and on different continents. Thus, these patterns of young firm financing show clear universal tendencies. Given that even small firms increasingly use formal bank financing over time, these results suggest that information asymmetry plays an important role in decreasing a young firm's ability to obtain bank finance.
Link to Data Set
Citation
“Chavis, Larry W.; Klapper, Leora F.; Love, Inessa. 2011. The Impact of the Business Environment on Young Firm Financing. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/13488 License: CC BY-NC-ND 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
World Bank Economic Review
1564-698X
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
No results found.
Users also downloaded
Showing related downloaded files
Publication Energizing Green Cities in Southeast Asia : Applying Sustainable Urban Energy and Emissions Planning(Washington, DC: World Bank, 2013-09)Fast-growing cities in the East Asia and Pacific (EAP) region will define the region's energy future and its greenhouse gas (GHG) footprint. Rapid urbanization and growing standards of living offer a major opportunity to EAP cities to become the global engines of green growth by choosing energy efficient solutions to suit their infrastructure needs and by avoiding locking in energy-intensive infrastructure. The underlying studies in three EAP pilot cities show a clear correlation between investments in energy efficient solutions in all major infrastructure sectors and economic growth by improving energy and GHG emissions efficiency, cities not only help the global environment, but they also support local economic development through productivity gains, reduced pollution, and more efficient use of resources. Thus, the Bank is well positioned to assist municipal governments in building institutions, creating policies, developing long-term green growth plans that will attract financial support and investments from both the private sector and the donor community, and linking efficiency and low carbon programs to international concessional financing and funding, as well as to the private sector investors who will play an important role in achieving green growth objectives. This paper is organized as follows: part one focuses on urban energy use and GHG emissions in EAP; part two presents sustainable urban energy and emissions planning in three pilot cities; and part three gives sustainable urban energy and emissions planning guidebook: a guide for cities in EAP.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Global Economic Prospects, January 2023(Washington, DC: World Bank, 2023-01-10)Global growth is projected to decelerate sharply, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions from Russia’s invasion of Ukraine. Investment growth in emerging market and developing economies (EMDEs) is expected to remain below its average rate of the past two decades. Further adverse shocks could push the global economy into recession. Small states are especially vulnerable to such shocks because of the reliance on external trade and financing, limited economic diversification, elevated debt, and susceptibility to natural disasters. Against this backdrop, it is critical that EMDE policy makers ensure that any fiscal support is focused on vulnerable groups, that inflation expectations remain well anchored, and that financial systems continue to be resilient. Urgent global and national efforts are also needed to mitigate the risks of global recession and debt distress in EMDEs, and to support a major increase in EMDE investment.Publication State and Trends of the Carbon Market—2004(2005)This study describes the status of the emerging carbon market, as of May 2004. The carbon market encompasses trades of greenhouse gas (GHG) emission allowances (under the European Union (EU) Emissions Trading Scheme), and project-based transactions, whereby a buyer participates in the financing of a project that reduces GHG emissions, compared with what would have happened otherwise, and gets emission reduction credits in exchange (for example, Clean Development Mechanism, or Joint Implementation projects under the Kyoto Protocol). The study finds that the carbon market is growing steadily. A total of 64 million metric tons of carbon dioxide equivalent (tCO2e) has been exchanged through projects from January to May 2004, nearly as much as during the whole year 2003 (78 million). Furthermore, the demand for emission reductions remains heavily concentrated, with a few EU governments, and Japanese firms the largest buyers. Finally, Asia is now the largest supplier of emission reductions, followed by Latin America, developed economies, and Eastern Europe. Prices of project-based emission reductions in early 2004 have remained essentially stable compared with 2003. In the absence of a standard contract, these prices strongly depend on the structure of the transaction, notably risk-sharing between buyers and sellers.Publication Envisioning 5G-Enabled Transport(World Bank, Washington, DC, 2020-06)The transport industry has entered a period of rapid advancement, and the pace of change is only increasing. The proliferation of electric vehicles, rapid advances in autonomous vehicles, the advent of the sharing economy and digital platforms, advances in big data and machine learning, and rapidly evolving business models, such as eCommerce and Mobility as a Service (MaaS), are causing profound changes throughout the sector. The development and rollout of fifth-generation (5G) mobile broadband has the potential to not only support, but accelerate these revolutionary changes as today’s digital transport solutions evolve and entirely new opportunities become viable. 5G presents a variety of benefits over previous generations of wireless connectivity, including greater bandwidth, lower latency, capacity to dedicate resources for critical functions, potential for greatly expanded numbers of devices, and easy sharing of data. In some cases, we see dramatic and exponential gains from previous technologies. Each of these 5G features will have an impact in the transport sector, contributing to transport-specific applications. Of these, three key opportunities present themselves: (1) revolutionary advancements in the potential connectivity of vehicles, (2) an increase in the number and ubiquity of connected devices, and (3) improved data availability for transport operations and management. When applying these new technologies to transport, changes can be expected across the sector, with—to some extent—no corner left untouched. While impossible to foresee all potential applications, the study predicts three likely and significant changes: (1) the rise of connected and autonomous vehicles, (2) increasingly smart and efficient logistics, and (3) improved urban transportation with the implementation of MaaS platforms. Figure E.1 highlights some of these key impact linkages between 5G and the transport sector. 5G-enabled vehicles will differ from those in use today, with business models in the transport sector expected to differ significantly from the current paradigm. Connected and autonomous vehicles (CAVs) will bring together a series of changes impacting the sector, including connectivity, electrification, autonomy, and new business models such as MaaS. While the connectivity provided by 5G represents only one enabling facet of this equation, it fundamentally changes the overall potential scope and viability of the model.