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
Attitudes toward risk and self-employment of young workers☆
TL;DR: In this article, the authors investigated the effect of individual risk tolerance on the probability of entry into self-employment and found that risk tolerance is an important determinant of the decision to enter selfemployment.
Journal ArticleDOI
Informal self-employment and macroeconomic fluctuations
TL;DR: This paper developed a flexible model with two sectors: a formal salaried (tradable) sector that may be affected by wage rigidities, and an informal (non tradable) self-employment sector faced with liquidity constraints to entry.
Journal ArticleDOI
The Impact of Regional Age Structure on Entrepreneurship
TL;DR: In this paper, an inverse U-shaped relationship between age and the decision to start a business was found, and the age-specific likelihood of becoming an entrepreneur changes with the size of the age cohort, pointing to the existence of age specific peer effects.
Journal ArticleDOI
Entrepreneurial finance, credit cards, and race☆
TL;DR: In this article, the authors examined the impact of financial deregulation on entrepreneurship and found that credit card deregulation increases the probability of entrepreneurial entry, with a particularly strong effect for black entrepreneurs.
Journal ArticleDOI
Business Demography in Spain: Determinants of Firm Survival
TL;DR: The impact of entry upon market performance depends not only on the number of entries and their size, but also on how long do the firms last as discussed by the authors, and this effect is more important the higher is the corresponding debt ratio or indebtness of the firm.
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.