Financing Constraints, Home Equity and Selection into Entrepreneurship

Ramana Nanda and Thais Laerkholm Jensen
Authors registered in the RePEc Author Service: Søren Leth-Petersen

No 10260, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 bene ting 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.

Keywords: entrepreneurship; Credit constraints; Mortgage finance; Household wealth (search for similar items in EconPapers)
JEL-codes: D14 D31 G21 L25 L26 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-ent, nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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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 (2021)
Working Paper: Financing Constraints, Home Equity and Selection into Entrepreneurship (2014)
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