Funding Self-Employment: The Role of Consumer Credit

Christoph Kneiding () and Alexander Kritikos
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Christoph Kneiding: LFS Financial Systems

No 6093, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates whether self-employed households use consumer loans – in particular instalment loans and overdrafts – to finance business activities. Controlling for financial and non-financial household variables we show that self-employed households particularly use personal overdrafts significantly more often than employee households. When analyzing the correlation between consumer loan take-ups and consumption of self-employed in comparison to employee households, we find first evidence that overdrafts are used by self-employed to finance their business as well. This indicates that intermingling constitutes a financing strategy when regular business loans might not be accessible.

Keywords: small business finance; financial intermingling; consumer credit (search for similar items in EconPapers)
JEL-codes: D12 D14 G32 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-10
New Economics Papers: this item is included in nep-ent
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Published - published in: Applied Economics, 2013, 45 (13), 1741-1749

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Related works:
Journal Article: Funding self-employment -- the role of consumer credit (2013)
Working Paper: Funding Self-Employment: The Role of Consumer Credit (2011)
Working Paper: Funding Self-Employment – The Role of Consumer Credit (2008)
Working Paper: Funding Self-Employment - The Role of Consumer Credit (2007)
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