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
Self‐Employment, Microenterprise, and the Poorest Americans
TL;DR: In this paper, the authors evaluate whether microenterprise programs (MEPs) are good public investments and show that the change in the absolute number of people who move from welfare to self-employment is less than 1 in 100.
Journal ArticleDOI
Financial constraints of ethnic entrepreneurship: Evidence from Germany
TL;DR: In this paper, the authors used data from a survey of ethnic and native entrepreneurs in Germany to identify the causes of credit constraints in start-up financing and found that entrepreneurs with an immigration background are significantly more likely to be denied credit or to be awarded smaller loans than requested than those who were born outside Germany.
ReportDOI
Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis
Emily Breza,Cynthia Kinnan +1 more
TL;DR: In this paper, the causal impacts of a reduction in credit supply on consumption, earnings, and employment in general equilibrium in rural labor markets were identified using a proprietary district-level data set from 25 separate, for-profit microlenders matched with household data from the National Sample Survey.
Journal ArticleDOI
Job search and asset accumulation under borrowing constraints
TL;DR: The authors examined the relationship between wealth accumulation and job search dynamics and found that borrowing constraints are tight and reinforce the influence of wealth on job acceptance decisions, namely that more initial wealth and access to larger amounts of credit increase wages and unemployment duration.
Posted Content
The Wealth Dynamics of Entrepreneurship for Black and White Families in the U.S.
TL;DR: Among black and white families, entrepreneurs hold disproportionately more wealth than workers as mentioned in this paper, and white entrepreneurs hold a lower fraction of black family wealth than white entrepreneurs, because black families have a lower rate of entrepreneurship.
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.