Housing Collateral and Entrepreneurship

Martin Schmalz, David Sraer and David Thesmar

No 19680, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that collateral constraints restrict entrepreneurial activity. Our empirical strategy uses variations in local house prices as shocks to the value of collateral available to individuals owning a house and controls for local demand shocks by comparing entrepreneurial activity of homeowners and renters operating in the same region. We find that an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, entrepreneurs with access to more valuable collateral create larger firms and more value added, and are more likely to survive, even in the long run.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-ent and nep-ure
Note: CF PR
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Citations: View citations in EconPapers (29)

Published as MARTIN C. SCHMALZ & DAVID A. SRAER & DAVID THESMAR, 2017. "Housing Collateral and Entrepreneurship," The Journal of Finance, vol 72(1), pages 99-132.

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Related works:
Journal Article: Housing Collateral and Entrepreneurship (2017)
Working Paper: Housing Collateral and Entrepreneurship (2014)
Working Paper: Housing Collateral and Entrepreneurship (2014)
Working Paper: Housing Collateral and Entrepreneurship (2014)
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