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Essays on entrepreneurship

Core, Fabrizio (2020) Essays on entrepreneurship. PhD thesis, London School of Economics and Political Science.

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In the first chapter, I investigate how women’s participation in entrepreneurship responds to a shock to maternity risk. Exploiting the liberalization of a contraceptive in Italy, I find that lower maternity risk leads to an increase in the number of young women who become entrepreneurs and in the equity stakes of new female entrepreneurs. The effects are larger for women joining innovative firms, who become more likely to be executives and the main owners of their firms. This suggests that easier management of maternity risk reduces the gender gap in entrepreneurship and that maternity risk is more important for women selecting in innovative entrepreneurship. The aim of the second chapter is to assess whether and how banks’ rentextraction affects entrepreneurial innovation, defined as the birth of innovative firms. I show that the effect of banks’ rent-extraction is theoretically ambiguous, and I show that a lower degree of banking competition leads to a weaker effect of the policy empirically, exploiting a policy intervention to foster entrepreneurial innovation. I propose a new way to measure banks’ rents and I use a difference-in-difference-in-difference (DDD) design and Instrumental Variables approach for identification. Following the policy intervention, the birth rate of innovative firms is lower where banking competition is weaker. In the third chapter, I study how the existence of benefits from relationship lending could be detrimental to the scope and success of Venture Capital. I construct a model in which entrepreneurial choices are tilted towards less innovative projects to reap the benefits of relationship banking. Relationship banking benefits cause the entrepreneur to opt for more traditional projects, forgoing more profitable innovative projects and VC financing. The mechanism is exacerbated by higher costs to obtain venture capital and lower VC expertise. The model shows how banks and venture capitalists are linked through entrepreneurial choices.

Item Type: Thesis (PhD)
Additional Information: © 2020 Fabrizio Core
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
Sets: Departments > Finance
Supervisor: Paravisini, Daniel and Axelson, Ulf

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