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Impact of the Financial Crisis on New Firm Registration

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As reports of sluggish global job creation continue, some look to new firms as a source of net job creation (Haltiwanger, 2011). But the lead article of this month’s Economics Letters, citing panel data from 93 countries, shows that most countries experienced a sharp drop in new firm registration during the financial crisis. As discussed in an earlier blog, relatively larger contractions are seen in countries with more developed financial markets and where entrepreneurs depend more on banks for start-up capital. These findings suggest a “dark side” to the relationship between financial development, entrepreneurship and growth (for example, Rajan and Zingales, 1998 and Klapper, et al., 2006). At the same time, it also suggests that greater financial development might be associated with more rapid economic recovery.


Access the entrepreneurship database.

Read the paper that explains the survey.

Further Reading:

Haltiwanger, J., R. Jarmin, and J. Miranda, 2011. "Who Creates Jobs? Small vs. Large vs. Young", Working paper.

Klapper, L., L. Laeven, and R. Rajan, 2006. Entry regulation as a barrier to entrepreneurship.
Journal of Financial Economics, 82: 3, 591-629.

Klapper, L. and I. Love, 2011. The Impact of the Financial Crisis on New Firm Registration, Economics Letters 113:1, 1-4.

Rajan R. and L. Zingales, 1998, Financial Dependence and Growth, American Economic Review 88, 559-586.


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