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Does the increase in house prices influence the creation of business startups?: The case of Sweden
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.ORCID iD: 0000-0001-8205-5918
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.ORCID iD: 0000-0003-0920-6585
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.
2017 (English)In: Region, ISSN 2409-5370, Vol. 4, no 1, p. 1-16Article in journal (Refereed) Published
Abstract [en]

Entrepreneurs are at the core of economic development in that they start new businesses or make existing firms grow. To fulfill this important role, entrepreneurs need access to financing. Owing to information asymmetry and the relatively high risk associated with business startups, many financiers shy away from engaging in relationships with firms during the early stages of their development. Based on the existing body of knowledge on the financing of entrepreneurship, we know that insider finance is of paramount importance in the early stages of firms’ development. We expand this knowledge base by analyzing the influence of house prices on business startups across municipalities in Sweden. In our analysis, we include data from all municipalities in Sweden. Our data on house prices and control variables are collected in period one, and our data on the frequency of startups are collected in period two. We find that rising house prices in a municipality lead to a higher frequency of startups. In our spatial Durbin model, we find that a 1% increase in house prices leads to around 0.15% increase in startups. Our findings are in line with the limited international research that has been previously conducted, and therefore, our study might make a small but vital addition to this growing body of knowledge within the area of entrepreneurship and regional development.

Place, publisher, year, edition, pages
European Regional Science Association , 2017. Vol. 4, no 1, p. 1-16
Keywords [en]
Business startups, Entrepreneurship, Financing, House prices, Mortgages
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-225944DOI: 10.18335/region.v4i1.95Scopus ID: 2-s2.0-85044753357OAI: oai:DiVA.org:kth-225944DiVA, id: diva2:1196832
Note

QC 20180411

Available from: 2018-04-11 Created: 2018-04-11 Last updated: 2018-04-11Bibliographically approved

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Berggren, BjörnFili, Andreas

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