Journal ArticleDOI
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
David S. Evans,Boyan Jovanovic +1 more
TLDR
The authors show that the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal, and a would-be entrepreneur must bear most of the risk inherent in his venture.Abstract:
Is the capital function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.read more
Citations
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Journal ArticleDOI
Family background variables as instruments for education in income regressions: A Bayesian analysis
TL;DR: In this article, the authors used data of the 2004 German Socio-Economic Panel and Bayesian analysis in order to analyze to what degree violations of the strong validity assumption affect the estimation results.
Journal ArticleDOI
The more business owners the merrier? The role of tertiary education
Mirjam van Praag,André van Stel +1 more
TL;DR: In this article, the authors investigated the role of tertiary education in business ownership and found that the optimal business ownership rate tends to decrease with higher education levels, which is consistent with microeconomic theory and evidence showing that owners with higher levels of human capital run larger firms.
Journal ArticleDOI
Intergenerational Succession in Small Family Businesses: Borrowing Constraints and Optimal Timing of Succession
TL;DR: In this paper, the authors focus on the decision of the business-operating family when to bring in the designated successor, and show that a utility-maximizing time is different from the income-minimising time only in the presence of binding borrowing constraints.
Journal ArticleDOI
Start-up Capital, Microenterprises and Technical Efficiency in Mexico
TL;DR: In this paper, a stochastic frontier production function with inefficiency effects related to the main sources of start-up capital is estimated using firm level data from Mexico's National Survey of Microenterprises.
Journal ArticleDOI
Determinants of growth in non-farm proprietor densities in the US, 1990–2000
Stephan J. Goetz,Anil Rupasingha +1 more
TL;DR: In this article, a regression analysis correcting for spatial autocorrelation reveals that proprietors respond rationally to economic incentives, including government policy, female labor force participation, and natural amenities.
References
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Book
The theory of economic development
TL;DR: Buku ini memberikan infmasi tentang aliran melingkar kehidupan ekonomi sebagaimana dikondisikan oleh keadaan tertentu, fenomena fundamental dari pembangunan EKonomi, kredit, laba wirausaha, bunga atas modal, and siklus bisnis as mentioned in this paper.
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Book
Risk, Uncertainty and Profit
TL;DR: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets as mentioned in this paper.
Journal ArticleDOI
The theory of economic development
Posted Content
Competition and Entrepreneurship
TL;DR: Kirzner as discussed by the authors argues that the assumption of perfect knowledge is unrealistic and argues that every market participant is a potential entrepreneur who can exploit a situation, which depends on a lack of perfect information among the market participants.