Financing Constraints, Home Equity and Selection into Entrepreneurship

Thais Laerkholm Jensen (), Søren Leth-Petersen and Ramana Nanda
Additional contact information
Thais Laerkholm Jensen: Danmarks Nationalbank

No 15-020, Harvard Business School Working Papers from Harvard Business School

Abstract: 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. In addition, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and that a significant share of entrants started longer-lasting firms. Our results are most consistent with the view that housing collateral enabled high ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than just leading to `frivolous entry' by those without prior industry experience.

Pages: 50 pages
Date: 2014-10, Revised 2021-05
New Economics Papers: this item is included in nep-ent, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.hbs.edu/faculty/pages/download.aspx?name=15-020.pdf Revised version, 2021 (application/pdf)

Related works:
Journal Article: Financing constraints, home equity and selection into entrepreneurship (2022)
Working Paper: Financing Constraints, Home Equity and Selection into Entrepreneurship (2021)
Working Paper: Financing Constraints, Home Equity and Selection into Entrepreneurship (2014)
Working Paper: Financing Constraints, Home Equity and Selection into Entrepreneurship (2014)
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