Institutional frameworks, venture capital and the financing of European new technology-based firms
Vanacker, Tom Heughebaert, Andy Manigart, Sophie
Vanacker, Tom
Heughebaert, Andy
Manigart, Sophie
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2014
Journal
Corporate Governance: An International Review
Book
Publication Volume
22
Publication Issue
3
Publication Begin page
199
Publication End page
215
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Abstract
This paper provides an analysis of the long- and short-run determinants of domestic bank lending to the private sector in eleven Central, Eastern and Southeastern European (CESEE) countries. We identify regime shifts for the observation period of 1997 to 2009, and the resulting subperiods are characterized by a different impact of the credit growth determinants. Estimating a credit demand equation as the long-term relation, we find – for most countries – a cointegration relationship with economic activity. We then examine the shortrun dynamics by applying both a linear and a nonlinear (Markov-switching) error correction model. While there is a significant correlation between credit growth and supply factors, namely bank deposits and banks’ equity, its impact differs across the subperiods. Identified regime switches in the short-run relation are driven primarily by differences in the credit supply factors rather than by the adjustment toward the credit equilibrium as the error correction coefficients show only slight cross-regime differences. In terms of regime switching, we distinguish between two groups of countries: those with one dominant regime, which is only briefly interrupted by a second one, and those with two equally pronounced regimes. In the latter group, a marked switch occurred just before or when the global crisis hit the CESEE region in the latter part of 2008. This regime shift is associated with a decreased correlation between deposit and credit growth.
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Keywords
Venture Capital, Corporate Governance, Financing, Shareholder Protection, Personal Bankruptcy Laws