Economic Factors affecting New Business Registrations

Abstract

The objective of this paper is to relationships between various economical factors that have effects on the registration of new businesses by using the Vector Autoregressive (VAR) model. In this paper, new business registrations were separate according to the size of the registered capital and business category. From the results, it was found that a sudden change (shock) in Gross Domestic Product (GDP) does not significantly relate to new business registrations. On the other hand, the shock in Minimum Loan Rate (MLR) creates negative responses form new business registrations of: 1.Medium-sized (businesses with registered capital of 1-4.9 million baht), 2.Construction and 3.Wholesale and retail trade; repair of motor vehicles and motorcycles. Finally, the last factor is shock of Business Sentiment Index (BSI). Overall, it creates positive responses from new business registrations. Registrations from Small-sized (registered capital of less than 1 million baht), Medium-sized, Large-sized (registered capital of 5 million baht or more), Manufacturing and Real estate activities are all with in the positive direction. However, Registrations from Construction category responds negatively.