Working Paper: NBER ID: w15498
Authors: William Kerr; Ramana Nanda
Abstract: Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. We review two major streams of research examining the relevance of financing constraints for entrepreneurship. We then introduce a framework that provides a unified perspective on these research streams, thereby highlighting some important areas for future research and policy analysis in entrepreneurial finance.
Keywords: No keywords provided
JEL Codes: E44; G21; L26; M13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial market depth (G19) | Ability of startups to raise capital (G24) |
| Financial market depth (G19) | Firm formation rates (L26) |
| Increased competition among financial intermediaries (G29) | Improved credit terms for startups (M13) |
| Improved credit terms for startups (M13) | Entry of startups into the market (M13) |
| Personal wealth (D14) | Entrepreneurship (M13) |
| Financing constraints (G32) | Entrepreneurial entry (L26) |
| Unobserved individual characteristics (C29) | Personal wealth and entrepreneurship relationship (P12) |