On the real effects of private equity investment: evidence from new ...

Table 8Private equity and alternative proxies for financeIndustry share(i) (ii) (iii) (iv) (v) (vi) (vii) (viii)All firms Small firmsPrivate creditover GDPAccess tofinanceInvestors’protectionHorse race Private creditover GDPAccess tofinanceInvestors’protectionHorse race-0.015 -0.010 -0.003 -0.008 -0.022 -0.03 -0.022 -0.019(0.109) (0.108) (0.109) (0.108) (0.069) (0.068) (0.067) (0.068)Entry US * Private equity 0.232 0.207 0.237 0.217 0.317 0.295 0.131 0.169(0.093)*** (0.085)*** (0.100)** (0.128)* (0.059)*** (0.054)*** (0.065)** (0.082)**Entry US *0.583 0.195 0.375 0.072Private credit over GDP (0.333)* (0.409) (0.222)* (0.267)Entry US *0.028 0.029 0.014 0.545Access to finance (0.011)*** (0.012)** (0.006)* (0.795)Entry US *0.198 0.209 0.242 0.221Investors’ protection (0.118)* (0.126)* (0.078)*** (0.083)***Observations 571 571 571 571 571 571 571 571R 2 0.63 0.69 0.68 0.69 0.64 0.64 0.64 0.64The reported estimates are from OLS regressions. The dependent variable is the ratio of new firms to total firms (columns (i)-(iv)) and of new firms with lessthan 10 employees to total firms (columns (v)-(viii)), by 2-digit NACE rev. 1.1 and averaged for 1998-1999. Industry share is the ratio of industry sales tototal sales by all industries in each country. Entry US is the ratio of new firms to total firms in the US, by 2-digit NACE rev. 1.1. Private credit over GDPmeasures the ratio of private credit allocated by commercial banks to country total GDP. Access to finance measures general access to external finance byhouseholds and businesses. Investor’s protection measures the degree of legal protection of private investment in the country. All regressions include aconstant, 2-digit industry dummies and country dummies, not reported. White’s heteroskedasticity corrected standard errors standard errors are reported inparentheses. ***, **, and * report significance at the 1%, 5% and 10% level, respectively. See Appendix 1 for detailed variable definitions and sources.44 ECBWorking Paper Series No 1078August 2009