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on Entrepreneurship |
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Issue of 2005‒12‒20
seven papers chosen by Marcus Dejardin Facultés Universitaires Notre-Dame de la Paix |
| By: | Lloyd Blanchard (Center for Policy Research, Maxwell School, Syracuse University); Bo Zhao (Federal Reserve Bank of Boston); John Yinger (Center for Policy Research, Maxwell School, Syracuse University) |
| Abstract: | This paper examines whether methodological deficiencies in the literature on discrimination in small business credit markets have a significant impact on the estimation of discrimination and provides a preliminary investigation into the causes of discrimination in these markets. We find substantial, statistically significant evidence of discrimination in loan approval against black-owned and Hispanic-owned businesses in 1998 with additional control variables, with a variety of different specifications, and with a simultaneous model of the application and loan-denial decisions. We also find that discrimination in small business lending may take the form of statistical discrimination, driven by lenders' stereotypes about the ability of black- and Hispanic-owned businesses to succeed under some circumstances. In addition, we find that neither adding additional control variables nor accounting for possible endogeneity alters the conclusion that there is no discrimination in interest rates on approved loans. We also find, however, that black-owned businesses do face discrimination in interest rates when they deal with some types of lenders, particularly finance companies. Because finance companies specialize in higher-risk borrowers, this finding might indicate that they are willing to consider group-membership as a risk predictor despite the illegality of this practice. These findings suggest that federal financial regulatory agencies should re-double their efforts to uncover and prosecute lenders who discriminate against black- and Hispanic-owned businesses. |
| Keywords: | credit, discrimination, entrepreneur, minority-owned business, small business |
| JEL: | J15 G21 M13 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:74&r=ent |
| By: | Vesa Kanniainen; Seppo Kari; Jouko Ylä-Liedenpohja |
| Abstract: | The paper shows how entrepreneurial taxes interact with the career choice of individuals, the quality of entrepreneurs, and their effort and investments. It is particularly relevant to differentiate the early effects on start-up enterprises with substantial uncertainty from the tax effects on mature firms where the uncertainty is resolved. That is why the neutrality results of dividend taxation from mature company theory do not carry over to start-up enterprises. The Nordic dual model encourages (discourages) the establishment of new enterprises by entrepreneurs who anticipate high (low) profitability. |
| Keywords: | dual income taxation, enterprise taxes |
| JEL: | H25 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1623&r=ent |
| By: | Carvalho, Antonio Gledson de; Calomiris, Charles W.; Matos, Joao Amaro de |
| Abstract: | Part of the way venture capitalists add value to portfolio firms is by obtaining and transferring information about senior managers across firms over time. Information transfer occurs on a significant scale and takes place both among a single venture capitalists portfolio firms and between different venture capitalists firms via a network of venture capitalists, which venture capitalists use to locate and relocate managers. We collect and analyze survey data on the operation of this human resource network. Theoretical and empirical analyses indicate that cross-sectional differences among portfolio firms are associated with differences in the intensity with which venture capitalists network. The observable factors relevant in explaining the intensity with which venture capitalists network include: 1) the value of the information transmitted though the network, 2) the riskiness of the activities of the portfolio firms, 3) the size of the venture capital fund, 4) the degree of difficulty in enticing executives to manage portfolio firms, and 5) the reputation of the venture capitalist for successfully recycling managers. We show that each of these factors reflects the costs and benefits to venture capitalists of participating in the network. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:unl:unlfep:wp470&r=ent |
| By: | Ooghe, H.; Spaenjers, C.; Pieter vandermoere |
| Abstract: | We give an overview of the shortcomings of the most frequently used statistical techniques in failure prediction modelling. The statistical procedures that underpin the selection of variables and the determination of coefficients often lead to ‘overfitting’. We also see that the ‘expected signs’ of variables are sometimes neglected and that an underlying theoretical framework mostly does not exist. Based on the current knowledge of failing firms, we construct a new type of failure prediction models, namely ‘simple-intuitive models’. In these models, eight variables are first logit-transformed and then equally weighted. These models are tested on two broad validation samples (1 year prior to failure and 3 years prior to failure) of Belgian companies. The performance results of the best simple-intuitive model are comparable to those of less transparent and more complex statistical models. |
| Date: | 2005–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2005-22&r=ent |
| By: | Maria J. Gil-Molto (Loughborough University Economics Department); Claudio A. Piga (Loughborough University Economics Department) |
| Abstract: | We analyze the determinants of entry and exit in the European Airline Markets in the post-liberalization period. Unlike previous studies, we find that the presence of charter or seasonal operators and the level of quality provided by the incumbents are relevant to explain entry and exit. Differential traits in the main low cost airlines' entry and exit behavior are also analysed. |
| Keywords: | Entry, Exit, Airlines, Conditional Logit |
| JEL: | L11 L93 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2005_10&r=ent |
| By: | Fabio Sabatini (University of Rome La Sapienza, Department of Public Economics) |
| Abstract: | This paper carries out an empirical assessment of the relationship between social capital and labour productivity in small and medium enterprises in Italy. By means of structural equations models, the analysis investigates the effect of different aspects of the multifaceted concept of social capital. While the bonding social capital of strong family ties seems to be irrelevant, the bridging social capital of weak ties connecting friends and acquaintances is proved to exert a significant and positive influence both on labour productivity and on human development. |
| Keywords: | Labour productivity, Small and medium enterprises, Industrial organization, Social capital, Social networks, Structural equations models |
| JEL: | J24 R11 O15 O18 |
| Date: | 2005–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0512008&r=ent |
| By: | Miren Lafourcade; Giordano Mion |
| Abstract: | This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data we find, as in Kim (1995) and Holmes and Stevens (2002, 2004), that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities, and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2005-42&r=ent |