Browsing by Author "Hanley, Aoife"

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    Bank Interest Margins and Business Start-Up Collateral: Testing for Convexity
    (Blackwell Publishing, 2006-07) Burke, Andrew; Hanley, Aoife
    The paper investigates the relationship between bank interest rate margins and collateral for loans issued to new ventures. The analysis finds a convex U-shaped relationship. The results indicate that while provision of collateral initially reduces bank exposure to risk (through security, more optimal levels of capital and lower moral hazard among entrepreneurs) that beyond a point its association with higher wealth gives rise to greater risk taking propensity among entrepreneurs and ultimately higher interest rates. This indicates that banks’ pricing policy may even help level the competitive playing field somewhat between ventures launched by higher and moderately lower wealth entrepreneurs.
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    Market concentration, market dynamism and business survival
    (Cranfield University School of Management, 2007-09) Burke, Andrew; Gorg, Holger; Hanley, Aoife
    The paper uses a unique dataset comprising the population of new ventures that enter the UK market in 1998. We argue that we would expect the effect of market concentration on firm survival to be different according to whether an industry is static (low entry and exit) or dynamic. In our empirical analysis we find support for this hypothesis. Industry concentration rates reduce the survival of new plants but only in markets marked by low entry and exit rates. Specifically, a 10 percent increase in the 5-firm concentration ratio or the Herfindahl index in a dynamic market, raises the survival rate of new ventures by approximately 2 percent. Our results suggest greater leniency towards more dominant firms in industries showing buoyant entry and exit rates.