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House prices, collateral, and self-employment

Manuel Adelino, Antoinette Schoar () and Felipe Severino

Journal of Financial Economics, 2015, vol. 117, issue 2, 288-306

Abstract: We show the importance of the collateral lending channel for small business employment over the past decade. Small businesses in areas with greater increases in house prices experienced stronger growth in employment than large firms in the same areas and industries. To identify the role of the collateral lending channel separately from aggregate changes in demand, we show that this effect is more pronounced in industries that need little start-up capital and in which housing collateral is more important. This increase is also present in manufacturing industries, particularly those that ship goods over long distances. In aggregate, the collateral lending channel explains 15–25% of employment variation.

Keywords: Housing; Collateral; Self-employment; Entrepreneurship; Small business (search for similar items in EconPapers)
JEL-codes: G23 R2 R31 L26 (search for similar items in EconPapers)
Date: 2015
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Working Paper: House Prices, Collateral and Self-Employment (2013) Downloads
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