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
Trajectories of Small Business Financial Structure
TL;DR: In this paper, a dynamic theory of the small firm is expounded, assuming entrepreneurs maximise business value over a finite time horizon, and predicted trajectories for key financial variables are seen to depend on whether debt or equity are cheaper.
Report SeriesDOI
Policies for Seed and Early Stage Finance: Findings from the 2012 OECD Financing Questionnaire
Karen E. Wilson,Filipe Silva +1 more
TL;DR: In this paper, the authors highlight the growth in support for financial instruments for seed and early stage firms across OECD member countries, including grants, loans and guarantee schemes, tax incentives and equity funds.
Journal ArticleDOI
House price shocks, windfall gains and hours of work: British evidence*
TL;DR: In this article, the authors investigated hours of work adjustments to two sources of capital gain: financial windfalls and real housing wealth gains and found that significant reductions in hours are found for both men and women in response to housing gains.
Journal ArticleDOI
Small Business, Entrepreneurship and Violent Conflict in Developing Countries
TL;DR: The authors survey the field of entrepreneurship and conflict in developing countries and find that violent conflict has diverse impacts on entrepreneurs, firms and their investment and production processes, and that there are many ways to overcome the legacies of fighting.
Posted Content
Irrational exuberance, entrepreneurial finance and public policy
TL;DR: In this article, the authors argue that optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending.
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.