Financing Constraints, Home Equity and Selection into Entrepreneurship

Research output: Contribution to journal › Journal article › Research › peer-review

Standard

Financing Constraints, Home Equity and Selection into Entrepreneurship. / Jensen, Thais Lærkholm; Leth-Petersen, Søren; Nanda, Ramana.

In: Journal of Financial Economics, Vol. 145, No. 2 Part A, 2022, p. 318-337.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Jensen, TL, Leth-Petersen, S & Nanda, R 2022, 'Financing Constraints, Home Equity and Selection into Entrepreneurship', Journal of Financial Economics, vol. 145, no. 2 Part A, pp. 318-337. https://doi.org/10.1016/j.jfineco.2021.10.012

APA

Jensen, T. L., Leth-Petersen, S., & Nanda, R. (2022). Financing Constraints, Home Equity and Selection into Entrepreneurship. Journal of Financial Economics, 145(2 Part A), 318-337. https://doi.org/10.1016/j.jfineco.2021.10.012

Vancouver

Jensen TL, Leth-Petersen S, Nanda R. Financing Constraints, Home Equity and Selection into Entrepreneurship. Journal of Financial Economics. 2022;145(2 Part A):318-337. https://doi.org/10.1016/j.jfineco.2021.10.012

Author

Jensen, Thais Lærkholm ; Leth-Petersen, Søren ; Nanda, Ramana. / Financing Constraints, Home Equity and Selection into Entrepreneurship. In: Journal of Financial Economics. 2022 ; Vol. 145, No. 2 Part A. pp. 318-337.

Bibtex

@article{5414ff5570bf492a9b2c53c14f1bfa7d,
title = "Financing Constraints, Home Equity and Selection into Entrepreneurship",
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. Nevertheless, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and a significant share of these entrants started longer-lasting firms. Our results are most consistent with a view that housing collateral enabled higher ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than only leading to {\textquoteleft}frivolous entry{\textquoteright} by those without prior industry experience.",
keywords = "Faculty of Social Sciences, Financing constraints, Entrepreneurship, Mortgage",
author = "Jensen, {Thais L{\ae}rkholm} and S{\o}ren Leth-Petersen and Ramana Nanda",
year = "2022",
doi = "10.1016/j.jfineco.2021.10.012",
language = "English",
volume = "145",
pages = "318--337",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier",
number = "2 Part A",

}

RIS

TY - JOUR

T1 - Financing Constraints, Home Equity and Selection into Entrepreneurship

AU - Jensen, Thais Lærkholm

AU - Leth-Petersen, Søren

AU - Nanda, Ramana

PY - 2022

Y1 - 2022

N2 - 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. Nevertheless, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and a significant share of these entrants started longer-lasting firms. Our results are most consistent with a view that housing collateral enabled higher ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than only leading to ‘frivolous entry’ by those without prior industry experience.

AB - 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. Nevertheless, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and a significant share of these entrants started longer-lasting firms. Our results are most consistent with a view that housing collateral enabled higher ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than only leading to ‘frivolous entry’ by those without prior industry experience.

KW - Faculty of Social Sciences

KW - Financing constraints

KW - Entrepreneurship

KW - Mortgage

U2 - 10.1016/j.jfineco.2021.10.012

DO - 10.1016/j.jfineco.2021.10.012

M3 - Journal article

VL - 145

SP - 318

EP - 337

JO - Journal of Financial Economics

JF - Journal of Financial Economics

SN - 0304-405X

IS - 2 Part A

ER -

ID: 286421392