Financing Constraints, Home Equity and Selection into Entrepreneurship
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Submitted manuscript, 1.74 MB, PDF document
We exploit a mortgage reform that differentially unlocked home equity across the Danish population and study how this impacted selection into entrepreneurship. We find that increased entry was concentrated among entrepreneurs whose firms were founded in industries where they had no prior work experience. Nevertheless, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and a significant share of these entrants started longer-lasting firms. Our results are most consistent with a view that housing collateral enabled higher ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than only leading to ‘frivolous entry’ by those without prior industry experience.
Original language | English |
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Journal | Journal of Financial Economics |
Volume | 145 |
Issue number | 2 Part A |
Pages (from-to) | 318-337 |
ISSN | 0304-405X |
DOIs | |
Publication status | Published - 2022 |
- Faculty of Social Sciences - Financing constraints, Entrepreneurship, Mortgage
Research areas
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ID: 286421392