Finance and entrepreneurial entry

Julia Korosteleva, Tomasz Mickiewicz

Research output: Preprint or Working paperWorking paper


This paper investigates the determinants of both the volume of finance and the sources of finance of business start-ups in 42 countries. Using the Global Entrepreneurship Monitor (GEM) surveys for 1998-2003, we jointly examine how the institutional business environment and individual characteristics of entrepreneurs affect the financing of entrepreneurs. We find that the property rights system is the most significant determinant of both the total volume of finance and of the use of external finance for the individual start-up project. In addition, our findings suggest that that the supply of informal finance is associated with the higher share of external sources in start-up finance, whereas the size of the formal financial sector appears to play a more important role for the volume of entrepreneurial self-finance. Our results suggest that the use of external finance by start-ups correlates with the extent of financial restrictions in a country in a non-monotonic way. We find that some financial restrictions may enhance the use of external funds by entrepreneurs, yet the sign of this effect reverses and the coefficient becomes stronger for the high level of financial repression by the government. Finally, our findings imply that the characteristics of the start-up finance are also affected by various individual characteristics of entrepreneurs, their growth intentions and ownership structure.
Original languageEnglish
Place of PublicationLondon (UK)
PublisherUniversity College London
Number of pages41
Publication statusPublished - Dec 2008

Publication series

NameEconomics working paper
PublisherUCL SSEES : Centre for comparative economics


  • start-ups
  • entrepreneurial finance
  • informal finance
  • financial restrictions
  • property rights


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