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
Credit Constraints, Job Mobility, and Entrepreneurship: Evidence from a Property Reform in China
TL;DR: In this article, the authors explore the impact of private property rights on entrepreneurship in the context of a housing reform in urban China that allowed state employees renting state-owned housing the opportunity to buy their homes at subsidized prices.
Posted Content
The Economics of Entrepreneurship: What We Know and What We Don't
TL;DR: In this paper, the authors provide a reflective overview of what economics adds to our understanding of entrepreneurship, and highlight several interesting research questions and a toolbox of methods to answer them.
Journal ArticleDOI
Housing Collateral and Entrepreneurship
TL;DR: In this paper, the authors show that collateral constraints restrict firm entry and post-entry growth, using French administrative data and cross-sectional variation in local house-price appreciation as shocks to collateral values.
Journal ArticleDOI
Risk Tolerance and Entrepreneurship
Hans K. Hvide,Georgios A. Panos +1 more
TL;DR: The authors found that common stock investors are around 50 percent more likely to subsequently start up a firm and that firms started up by stock market investors have about 25 percent lower sales and 15 percent lower return on assets.
Journal ArticleDOI
The Winner's Curse of Human Capital
Thomas Åstbro,Irwin Bernhardt +1 more
TL;DR: In this article, the authors extend a model developed by Evans and Jovanovic (1989) to explain when start-ups are credit constrained, and show that the magnitude of the credit constraint is conditioned by the relative productivity of human capital in both wage work and self-employment.
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.