Luigi Zingales: evaluation

Transcript context

…Thank you very much for coming. My name’s David Wille. I’m a research assistant with the Mercatus Center. Part of our research is looking at the connection between the financial services industry and small business creation. As you know, on a number of measures, small business creation is down, innovation seems to be down in the US. What, in your view, is the connection, if any, between the financial services industry, the problems in that industry, and the decline in innovation, the decline of new business creation in the US? Thank you. I think that the role that the financial sector has in promoting new businesses, innovation, and also small business, is crucial. Much of the first book with Raghu Rajan was dedicated precisely to celebrate this role. Do they succeed always so well? The answer is no, because there are some frictions. Ironically, I don’t think we’re there anymore, but there was period in which venture capitalists were so much flooded with money that they had to dish out this money sufficiently fast, that they had to shell it out in big pieces. They were only financing more advanced companies, because they couldn’t find the time to actually shell it out in small pieces at a time. It’s very important that you have capital in the right people to do that. If I were to point out the major problem to financial innovation today in the United States, I know the financial system. In other countries, I will think it’s the financial system. In Italy, clearly it’s the financial system. In the United States, it’s not. It’s more of a pattern policy and other form of barriers to entry. One story that I tell in my book that really motivated me to write the book is when I got approached by some students that were trying to start a company. The first thing that they had devised was basically a lobbying plan. I said, “If the first thing, the part of the business plan, is the lobbying plan, then we have a problem in America.” Frank Manheim, School of Government Policy and International Affairs right here. I wonder if you have taken a look or compared the environmental regulatory policies in Europe with those in the United States, which are in quite a bit of debate right now, and what your thoughts about the comparisons might be.…

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