[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/fau/wpaper/wp2020_39.html
   My bibliography  Save this paper

Institutions, Financial Development, and Small Business Survival: Evidence from European Emerging Markets

Author

Listed:
  • Ichiro Iwasaki

    (Institute of Economic Research, Hitotsubashi University, Tokyo, Japan)

  • Evzen Kocenda

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic
    Institute of Information Theory and Automation, Czech Academy of Sciences, Prague, Czech Republic
    CESifo, Munich, IOS, Regensburg)

  • Yoshisada Shida

    (Economic Research Institute for Northeast Asia (ERINA), Niigata, Japan)

Abstract
In this paper, we traced the survival status of 94,401 small businesses in 17 European emerging markets from 2007-2017 and empirically examined the determinants of their survival, focusing on institutional quality and financial development. We found that institutional quality and the level of financial development exhibit statistically significant and economically meaningful impacts on the survival probability of the SMEs being researched. The evidence holds even when we control for a set of firm-level characteristics such as ownership structure, financial performance, firm size, and age. The findings are also uniform across industries and country groups and robust beyond the difference in assumption of hazard distribution, firm size, region, and time period.

Suggested Citation

  • Ichiro Iwasaki & Evzen Kocenda & Yoshisada Shida, 2020. "Institutions, Financial Development, and Small Business Survival: Evidence from European Emerging Markets," Working Papers IES 2020/39, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2020.
    • Handle: RePEc:fau:wpaper:wp2020_39
    as

    Download full text from publisher

    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6298
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Croix & Clara Delavallade, 2009. "Growth, public investment and corruption with failing institutions," Economics of Governance, Springer, vol. 10(3), pages 187-219, July.
    2. Kočenda, Evžen & Iwasaki, Ichiro, 2020. "Bank survival in Central and Eastern Europe," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 860-878.
    3. Patrick Musso & Stefano Schiavo, 2008. "The impact of financial constraints on firm survival and growth," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 135-149, April.
    4. Henisz, Witold J. & Williamson, Oliver E., 1999. "Comparative Economic Organization—Within and Between Countries," Business and Politics, Cambridge University Press, vol. 1(3), pages 261-277, November.
    5. Baumöhl, Eduard & Iwasaki, Ichiro & Kočenda, Evžen, 2020. "Firm survival in new EU member states," Economic Systems, Elsevier, vol. 44(1).
    6. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    7. Baumöhl, Eduard & Iwasaki, Ichiro & Kočenda, Evžen, 2019. "Institutions and determinants of firm survival in European emerging markets," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 431-453.
    8. Helena Persson, 2004. "The Survival and Growth of New Establishments in Sweden, 1987-1995," Small Business Economics, Springer, vol. 23(5), pages 423-440, October.
    9. Tobias Ebert & Thomas Brenner & Udo Brixy, 2019. "New firm survival: the interdependence between regional externalities and innovativeness," Small Business Economics, Springer, vol. 53(1), pages 287-309, June.
    10. Tsoukas, Serafeim, 2011. "Firm survival and financial development: Evidence from a panel of emerging Asian economies," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1736-1752, July.
    11. Ichiro Iwasaki & Byung-Yeon Kim, 2020. "Legal forms, organizational architecture, and firm failure: a large survival analysis of Russian corporations," European Journal of Law and Economics, Springer, vol. 49(2), pages 227-275, April.
    12. JosÈ Mata & Pedro Portugal, 2004. "Patterns of Entry, Post-Entry Growth and Survival: A Comparison Between Domestic and Foreign Owned Firms," Small Business Economics, Springer, vol. 22(3_4), pages 283-298, April.
    13. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
    14. Ono, Arito & Uesugi, Iichiro, 2014. "SME Financing in Japan during the Global Financial Crisis: Evidence from Firm Surveys," HIT-REFINED Working Paper Series 6, Institute of Economic Research, Hitotsubashi University.
    15. Ichiro Iwasaki & Evžen Kočenda, 2020. "Survival of service firms in European emerging economies," Applied Economics Letters, Taylor & Francis Journals, vol. 27(4), pages 340-348, February.
    16. Evžen Kočenda, 1999. "Residual State Property in the Czech Republic," Eastern European Economics, Taylor & Francis Journals, vol. 37(5), pages 6-35, October.
    17. Baltagi, Badi H. & Demetriades, Panicos O. & Law, Siong Hook, 2009. "Financial development and openness: Evidence from panel data," Journal of Development Economics, Elsevier, vol. 89(2), pages 285-296, July.
    18. Mc Namara, Andrea & Murro, Pierluigi & O'Donohoe, Sheila, 2017. "Countries lending infrastructure and capital structure determination: The case of European SMEs," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 122-138.
    19. Zoltan Acs, 2008. "How is Entrepreneurship Good for Economic Growth?," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 21, pages 291-301, Edward Elgar Publishing.
    20. Yi Che & Yi Lu & Zhigang Tao, 2017. "Institutional quality and new firm survival," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(3), pages 495-525, July.
    21. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    22. Christopher J. Boudreaux & Boris Nikolaev, 2019. "Capital is not enough: opportunity entrepreneurship and formal institutions," Small Business Economics, Springer, vol. 53(3), pages 709-738, October.
    23. Jan Hanousek & Evžen Kočenda, 2008. "Potential of the state to control privatized firms," Economic Change and Restructuring, Springer, vol. 41(2), pages 167-186, June.
    24. Silviano Esteve-Pérez & Juan Mañez-Castillejo, 2008. "The Resource-Based Theory of the Firm and Firm Survival," Small Business Economics, Springer, vol. 30(3), pages 231-249, March.
    25. Hanousek, Jan & Kocenda, Evzen & Kutan, Ali M., 2009. "The reaction of asset prices to macroeconomic announcements in new EU markets: Evidence from intraday data," Journal of Financial Stability, Elsevier, vol. 5(2), pages 199-219, June.
    26. Fan, Joseph P.H. & Wei, K.C. John & Xu, Xinzhong, 2011. "Corporate finance and governance in emerging markets: A selective review and an agenda for future research," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 207-214, April.
    27. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-450, August.
    28. Silviano Pérez & Amparo Llopis & Juan Llopis, 2004. "The Determinants of Survival of Spanish Manufacturing Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 251-273, August.
    29. Hanousek, Jan & Kočenda, Evžen & Shamshur, Anastasiya, 2015. "Corporate efficiency in Europe," Journal of Corporate Finance, Elsevier, vol. 32(C), pages 24-40.
    30. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    31. Hanas Cader & John Leatherman, 2011. "Small business survival and sample selection bias," Small Business Economics, Springer, vol. 37(2), pages 155-165, September.
    32. Marco Cucculelli & Valentina Peruzzi, 2020. "Post-crisis firm survival, business model changes, and learning: evidence from the Italian manufacturing industry," Small Business Economics, Springer, vol. 54(2), pages 459-474, February.
    33. Evzen Kocenda & Jan Hanousek, 2012. "Firm break-up and performance," Economics of Governance, Springer, vol. 13(2), pages 121-143, June.
    34. Wolfgang Aussenegg & Ranko Jelic, 2007. "The Operating Performance of Newly Privatised Firms in Central European Transition Economies," European Financial Management, European Financial Management Association, vol. 13(5), pages 853-879, November.
    35. repec:imf:imfsdn:15/8 is not listed on IDEAS
    36. Robert Kelly & Eoin Brien & Rebecca Stuart, 2015. "A long-run survival analysis of corporate liquidations in Ireland," Small Business Economics, Springer, vol. 44(3), pages 671-683, March.
    37. Francesca Gagliardi, 2009. "Financial development and the growth of cooperative firms," Small Business Economics, Springer, vol. 32(2), pages 231-231, February.
    38. Farinha, Luísa & Spaliara, Marina-Eliza & Tsoukas, Serafeim, 2019. "Bank shocks and firm performance: New evidence from the sovereign debt crisis," Journal of Financial Intermediation, Elsevier, vol. 40(C).
    39. Erol Taymaz & Şule Özler, 2007. "Foreign Ownership, Competition, and Survival Dynamics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(1), pages 23-42, August.
    40. Joseph LiPuma & Scott Newbert & Jonathan Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies: a contingency model of firm age and size," Small Business Economics, Springer, vol. 40(4), pages 817-841, May.
    41. Joseph Lipuma & Scott L. Newbert & Jonathan P. Doh, 2013. "The effect of institutional quality on firm export performance in emerging economies : a contingency model of firm age and size," Post-Print hal-02312662, HAL.
    42. Jarko Fidrmuc & Svatopluk Kapounek & Martin Siddiqui, 2017. "Which Institutions Are Important for Firms Performance? Evidence from Bayesian Model Averaging Analysis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 64(4), pages 383-400, September.
    43. Katsiaryna Svirydzenka, 2016. "Introducing a New Broad-based Index of Financial Development," IMF Working Papers 2016/005, International Monetary Fund.
    44. Ms. Ratna Sahay & Mr. Martin Cihak & Mr. Papa M N'Diaye & Mr. Adolfo Barajas & Ms. Diana B Ayala Pena & Ran Bi & Miss Yuan Gao & Ms. Annette J Kyobe & Lam Nguyen & Christian Saborowski & Katsiaryna Sv, 2015. "Rethinking Financial Deepening: Stability and Growth in Emerging Markets," IMF Staff Discussion Notes 2015/008, International Monetary Fund.
    45. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
    46. David Urbano & Sebastian Aparicio & David Audretsch, 2019. "Twenty-five years of research on institutions, entrepreneurship, and economic growth: what has been learned?," Small Business Economics, Springer, vol. 53(1), pages 21-49, June.
    47. Dorothea Schäfer & Oleksandr Talavera, 2009. "Small business survival and inheritance: evidence from Germany," Small Business Economics, Springer, vol. 32(1), pages 95-109, January.
    48. Anusha Chari & Paige P. Ouimet & Linda L. Tesar, 2010. "The Value of Control in Emerging Markets," The Review of Financial Studies, Society for Financial Studies, vol. 23(4), pages 1741-1770, April.
    49. Zoltan Acs & Sameeksha Desai & Jolanda Hessels, 2008. "Entrepreneurship, economic development and institutions," Small Business Economics, Springer, vol. 31(3), pages 219-234, October.
    50. Laura Alfaro & Maggie Xiaoyang Chen, 2012. "Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 30-55, August.
    51. Zoltan Acs & Laszlo Szerb, 2007. "Entrepreneurship, Economic Growth and Public Policy," Small Business Economics, Springer, vol. 28(2), pages 109-122, March.
    52. Ratna Sahay & Martin Cihak & Papa M N'Diaye & Adolfo Barajas & Diana B Ayala Pena & Ran Bi & Yuan Gao & Annette J Kyobe & Lam Nguyen & Christian Saborowski & Katsiaryna Svirydzenka & Seyed Reza Yousef, 2015. "Rethinking Financial Deepening; Stability and Growth in Emerging Markets," IMF Staff Discussion Notes 15/08, International Monetary Fund.
    53. Marcus Box, 2008. "The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden," Small Business Economics, Springer, vol. 31(4), pages 379-393, December.
    54. Francesca Gagliardi, 2009. "Financial development and the growth of cooperative firms," Small Business Economics, Springer, vol. 32(4), pages 439-464, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ting Liu & Juan Qi, 2024. "The Mechanism of Enterprise Digital Transformation on Resilience from the Perspective of Financial Sustainability," Sustainability, MDPI, vol. 16(17), pages 1-21, August.
    2. Marco Cucculelli & Riccardo Cappelli & Jasmine Mondolo, 2024. "Does market power drive business model innovation? Evidence from Italian family manufacturing firms," Small Business Economics, Springer, vol. 63(1), pages 447-475, June.
    3. Iwasaki, Ichiro & Kočenda, Evžen & Shida, Yoshisada, 2021. "Distressed acquisitions: Evidence from European emerging markets," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 962-990.
    4. Lucio Morettini & Bianca Potì & Roberto Gabriele, 2023. "Process and strategies of growth in medium-sized fast-growing firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 605-626, September.
    5. Chang, Chong-Chuo, 2023. "The impact of quality of institutions on firm performance: A global analysis," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 694-716.
    6. Sun, Ruohan & Zhou, Nan & Zhang, Bing, 2023. "Can bank branch establishment help SMEs survive? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 88(C).
    7. Ebuka Christian Orjiakor, 2022. "Business climate and firm exit in developing countries: evidence from Nigeria," Future Business Journal, Springer, vol. 8(1), pages 1-13, December.
    8. Marta Widz & Nadine Kammerlander, 2023. "Entrepreneurial exit intentions in emerging economies: a neoinstitutional perspective," Small Business Economics, Springer, vol. 60(2), pages 615-638, February.
    9. Nicolae Stef, 2021. "Institutions and corporate financial distress in Central and Eastern Europe," European Journal of Law and Economics, Springer, vol. 52(1), pages 57-87, August.
    10. Mark J. Garmaise & Gabriel Natividad, 2024. "Fiscal windfalls and entrepreneurship: fostering entry or promoting incumbents?," Small Business Economics, Springer, vol. 62(1), pages 133-158, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iwasaki, Ichiro & Kočenda, Evžen & Shida, Yoshisada, 2021. "Distressed acquisitions: Evidence from European emerging markets," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 962-990.
    2. Baumöhl, Eduard & Iwasaki, Ichiro & Kočenda, Evžen, 2019. "Institutions and determinants of firm survival in European emerging markets," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 431-453.
    3. Baumöhl, Eduard & Iwasaki, Ichiro & Kočenda, Evžen, 2020. "Firm survival in new EU member states," Economic Systems, Elsevier, vol. 44(1).
    4. Kočenda, Evžen & Iwasaki, Ichiro, 2020. "Bank survival in Central and Eastern Europe," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 860-878.
    5. Nicola Del Sarto & Alberto Di Minin & Giulio Ferrigno & Andrea Piccaluga, 2021. "Born global and well educated: start-up survival through fuzzy set analysis," Small Business Economics, Springer, vol. 56(4), pages 1405-1423, April.
    6. Ichiro Iwasaki & Byung-Yeon Kim, 2020. "Legal forms, organizational architecture, and firm failure: a large survival analysis of Russian corporations," European Journal of Law and Economics, Springer, vol. 49(2), pages 227-275, April.
    7. Anna Maria Ferragina & Fernanda Mazzotta & Erol Taymaz & Kamil Yilmaz, 2013. "The Impact Of Fdi On Firm Survival And Employment: A Comparative Analysis For Turkey And Italy," ERSA conference papers ersa13p1211, European Regional Science Association.
    8. Carlos Carreira & Paulino Teixeira, 2011. "The shadow of death: analysing the pre-exit productivity of Portuguese manufacturing firms," Small Business Economics, Springer, vol. 36(3), pages 337-351, April.
    9. Rousselière, Damien & Joly, Iragäel, 2011. "A propos de la capacité à survivre des coopératives : une étude de la relation entre âge et mortalité des organisations coopératives agricoles françaises," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(3).
    10. Chun Yang & Bart Bossink & Peter Peverelli, 2017. "High-tech start-up firm survival originating from a combined use of internal resources," Small Business Economics, Springer, vol. 49(4), pages 799-824, December.
    11. Boudreaux, Christopher & Caudill, Steven, 2019. "Entrepreneurship, Institutions, and Economic Growth: Does the Level of Development Matter?," MPRA Paper 94244, University Library of Munich, Germany.
    12. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    13. The Nguyen Huynh, 2022. "Spatial effects of institutional quality on firm performance: evidence from Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 89-105, November.
    14. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2015. "Inverted-U relationship between innovation and survival: Evidence from firm-level UK data," MPRA Paper 68010, University Library of Munich, Germany, revised 10 Nov 2015.
    15. Alexandra Tsvetkova & Jean-Claude Thill & Deborah Strumsky, 2014. "Metropolitan innovation, firm size, and business survival in a high-tech industry," Small Business Economics, Springer, vol. 43(3), pages 661-676, October.
    16. David Audretsch & Xiaodan Guo & Adrian Hepfer & Hugo Menendez & Xingzhi Xiao, 2016. "Ownership, productivity and firm survival in China," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(1), pages 67-83, March.
    17. David Audretsch & Xiaodan Guo & Adrian Hepfer & Hugo Menendez & Xingzhi Xiao, 2016. "Ownership, productivity and firm survival in China," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(1), pages 67-83, March.
    18. Damien Rousselière, 2019. "A Flexible Approach to Age Dependence in Organizational Mortality: Comparing the Life Duration for Cooperative and Non-Cooperative Enterprises Using a Bayesian Generalized Additive Discrete Time Survi," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(4), pages 829-855, December.
    19. Pittiglio, Rosanna, 2024. "Counterfeiting and firm survival. Evidence from the Italian manufacturing industry," Economic Systems, Elsevier, vol. 48(2).
    20. Evžen Kočenda & Jan Hanousek, 2012. "State ownership and control in the Czech Republic," Economic Change and Restructuring, Springer, vol. 45(3), pages 157-191, August.

    More about this item

    Keywords

    small business; institutions; financial development; survival analysis; European emerging markets;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fau:wpaper:wp2020_39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Natalie Svarcova (email available below). General contact details of provider: https://edirc.repec.org/data/icunicz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.