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
Bank market power and sme financing constraints
TL;DR: In this article, the Lerner index was used as an alternative to traditional measures of concentration in the industrial organization literature to measure market power in corporate lending relationships, and the results showed that the results are sensitive to the choice between IO margins and traditional concentration measures.
Posted Content
Who Starts New Firms? - Preliminary Explorations of Firms-in-Gestation
TL;DR: In this article, the authors investigate the factors that lead individuals to start firms and find that participation in the entrepreneurial process is a major activity in the U.S. workforce, and is concentrated among young adults.
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Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?
TL;DR: The authors used Census Bureau data to study local determinants of manufacturing startups across cities and industries, and found that new entrants seem particularly drawn to areas with many smaller suppliers, as suggested by Chinitz (1961).
Journal ArticleDOI
Temporary migration and capital market imperfections
TL;DR: In this paper, a representative worker maximises his life cycle utility by choosing simultaneously her migration duration and her occupation after return, in a world where credit markets are imperfect, individuals try to overcome liquidity constraints in their home country by accumulating savings in a foreign country.
Journal ArticleDOI
Workplace Peers and Entrepreneurship
TL;DR: It is found that an individual is more likely to become an entrepreneur if his or her coworkers have been entrepreneurs before, and peer influences are strongest for those who have less exposure to entrepreneurship in other aspects of their lives.
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.