Can local financial depth and dependence on external funding impact regional creation of new firms in Chile?

Uniform regional development is a challenge in low-income and emerging countries, making the role of financial systems to promote new business, investment, entrepreneurship, and growth particularly important. This paper investigates the combined effect of dependence on external funding and financial depth at a regional level, estimating a panel model using Chilean data. This study reveals evidence of a direct relationship between entrepreneurship and the combined effect of the two variables. Specifically, the combined effect of financial depth and external funding encourages the creation of regional companies in Chile.