Public institutions and venture capital in Europe: a cross-country panel data analysis Online publication date: Wed, 04-Nov-2009
by Mondher Cherif, Kaouthar Gazdar
International Journal of Public Sector Performance Management (IJPSPM), Vol. 1, No. 3, 2009
Abstract: The aim of this paper is to explore the importance of public institutions as determinants of venture capital investments, extending the equilibrium model from Jeng and Wells (2000). Starting from the existing literature in this area, we extend it so as to identify the role of public institutions in determining venture capital investments. Our empirical model includes a wide variety of institutional variables collected from different sources and many of the determinants already tested in previous studies. Using a cross-section and a panel data analysis, we find that early stage investments and funds raised are differently affected by the public institutions. Thus, while the public institutions appear relevant for early stage investment, the funds raised are not affected by the institutional indicators. These results are robust to different estimations methods and institutional variables.
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