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
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Posted Content
Formal and Informal Financing in a Chicago Ethnic Neighborhood
Philip Bond,Robert M. Townsend +1 more
TL;DR: In this article, the authors use data from a survey of households and businesses in a Hispanic neighborhood of Chicago to examine the actual use of banks and the widespread use of alternative financing mechanisms.
Journal ArticleDOI
Are poor able to access the informal credit market? Evidence from rural households in China
TL;DR: In this article, an instrumental variable model is estimated to account for potential endogeneity issues and showed that poorer households have lower probability of entering the informal credit market and that the poor are limited by social network and have no financial means to invest in their social capital to expand their social network.
Journal ArticleDOI
Family Background and the Propensity for Self-Employment
TL;DR: This paper found that men with self-employed fathers and higher parental incomes are more likely to be self-employees, the impact of paternal self-employment is leveraged by higher family income, and self employment is more likely when the father worked in an occupation with task requirements similar to those of an independent business.
Journal ArticleDOI
Access to Financial Capital among U.S. Businesses: The Case of African American Firms:
Alicia Robb,Robert W. Fairlie +1 more
TL;DR: In this article, the authors trace the relationship between wealth and access to financial capital and the African American-owned business and find that African Americans have levels of wealth that are one-eleventh those of whites.
Journal ArticleDOI
Inequality, finance and renewable energy consumption in Sub-Saharan Africa
TL;DR: In this article, the authors investigated linkages between financial development, income inequality and renewable energy consumption from 39 countries in Sub-Saharan Africa, based on data for the period 2004-2014, Generalized Method of Moments (GMM) and Quantile Regression (QR).
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.