TY  - JOUR
AU  - Alfaro,Laura
AU  - Charlton,Andrew
TI  - International Financial Integration and Entrepreneurial Firm Activity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13118
PY  - 2007
Y2  - May 2007
UR  - http://www.nber.org/papers/w13118
L1  - http://www.nber.org/papers/w13118.pdf
N1  - Author contact info:
Laura Alfaro
Harvard Business School
Morgan Hall 263
Soldiers Field
Boston, MA 02163
Tel: 617/495-7981
Fax: 617/496-5985
E-Mail: lalfaro@hbs.edu

Andrew Charlton
London School of Economics
Houghton Street
London, WC2A 2AE, U.K
E-Mail: andrew.h.charlton@gmail.com
AB  - We explore the relation between international financial integration and the level of entrepreneurial activity in a country. We use a unique firm level data set of approximately 24 million firms in nearly 100 countries in 2004 and 1999, which enables us to present both cross-country and industry level evidence. We establish robust cross-country correlations between increased international financial integration and the activity of entrepreneurs using various proxies for entrepreneurial activity such as entry, size, and skewness of the firm-size distribution and de jure and de facto measures of international capital integration. We then explore causal channels through which foreign capital may encourage entrepreneurship. We find evidence that entrepreneurial activity in industries which are more reliant on external finance is disproportionately affected by international financial integration, suggesting that foreign capital may improve access to capital either directly or through improved domestic financial intermediation. Second we find that entrepreneurial activity is higher in industries which have a large share of foreign firms or in vertically linked industries.
ER  -