Financing Constraints, Home Equity and Selection into Entrepreneurship

Thais Lærkholm Jensen, Søren Leth-Petersen and Ramana Nanda

No 20583, NBER Working Papers from National Bureau of Economic Research, Inc

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 benefiting 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.

JEL-codes: D14 D31 G21 G28 L26 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-ban, nep-ent, nep-eur, nep-sbm and nep-ure
Note: CF PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published as Thais Laerkholm Jensen & Søren Leth-Petersen & Ramana Nanda, 2021. "Financing constraints, home equity and selection into entrepreneurship," Journal of Financial Economics, .

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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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