The relationship between credit constraints and household entrepreneurship in China

Dongliang Cai, Quanyun Song, Shuang Ma, Yang Dong and Qiuhua Xu

International Review of Economics & Finance, 2018, vol. 58, issue C, 246-258

Abstract: This paper evaluates the impact of credit constraint on entrepreneurship by utilizing 2011 China Household Finance and Survey micro-data. We measure household credit constraint directly and use the LPM model to estimate the impact of credit constraint on entrepreneurship. We employ predetermined credit constraint, quasi-experiment, and instrumental variable to eliminate the possible endogeneity problem. Empirical estimates show that credit constraint significantly decreases the probabilities of households to start businesses by around 3 percentage points in general. Further analysis shows that credit constraint significantly decreases the propensity of households to entry into enterprise operation, while it has no significant impact on small handicraft operation.

Keywords: Credit constraint; Entrepreneurship; Household finance (search for similar items in EconPapers)
JEL-codes: E51 L26 R29 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:58:y:2018:i:c:p:246-258

DOI: 10.1016/j.iref.2018.03.024

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