Household wealth inequality, entrepreneurs’ financial constraints, and the great recession: evidence from the Kauffman Firm Survey

Fabio Braggion, Mintra Dwarkasing () and Steven Ongena
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Mintra Dwarkasing: Erasmus University Rotterdam

Small Business Economics, 2018, vol. 50, issue 3, No 8, 533-543

Abstract: Abstract We empirically test if household wealth inequality affects borrowing constraints of young entrepreneurs. We construct a measure of wealth inequality at the US county level based on the distribution of financial rents in 2004. We find that in more unequal areas, entrepreneurs are less likely to apply for a loan fearing that their applications will be turned down and they use more of their own funds to finance their ventures. In more unequal areas, the number of bank establishments per capita is lower, this effect being stronger during the 2007–2008 financial crisis.

Keywords: Wealth inequality; Entrepreneurship; Financial constraints (search for similar items in EconPapers)
JEL-codes: D31 G3 L26 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11187-017-9906-2

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