nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒09‒11
six papers chosen by
Marcus Dejardin
Université de Namur

  1. Personal bankruptcy law, debt portfolios, and entrepreneurship By Mankart, Jochen; Rodano, Giacomo
  2. Capital Market Financing, Firm Growth, and Firm Size Distribution By Tatiana Didier; Ross Levine; Sergio L. Schmukler
  3. Business science links for a new growth path By Jürgen Janger
  4. SME Credit Risk Analysis Using Bank Lending Data: An Analysis of Thai SMEs By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Charoensivakorn, Phadet; Niraula, Baburam

  1. By: Mankart, Jochen; Rodano, Giacomo
    Abstract: Every year 400,000 entrepreneurs fail and 60,000 file for personal bankruptcy. The option to declare bankruptcy provides entrepreneurs with insurance against the financial consequences of business failures. However, it comes at the cost of worsened credit market conditions. In this paper, we construct a quantitative general equilibrium model of entrepreneurship to show that the presence of secured credit in addition to unsecured credit substantially alters the trade-off between insurance and credit conditions. A lenient bankruptcy law always worsens credit conditions, in particular for poor entrepreneurs. If secured credit is not available, their credit conditions are so bad that many prefer to become workers. In that case, we show that the optimal bankruptcy law is very harsh because the benefits from better credit conditions dominate the worsened insurance. However, if secured credit is available, entrepreneurs who might be rationed out of the unsecured credit market can still obtain secured credit. Therefore, they can run larger firms, which makes entrepreneurship more attractive. Since the presence of secured credit lowers the cost of a generous bankruptcy law, we find that the optimal law is lenient in this case; exactly the opposite result as obtained in the model version without secured credit.
    Keywords: Personal Bankruptcy,Entrepreneurship,Occupational Choice
    JEL: M13 K10 O41 E20
    Date: 2015
  2. By: Tatiana Didier (World Bank); Ross Levine (University of California at Berkeley and National Bureau of Economic Research); Sergio L. Schmukler (World Bank and Hong Kong Institute for Monetary Research)
    Abstract: How many and which firms issue equity and bonds in domestic and international markets, how do these firms grow relative to non-issuing firms, and how does firm performance vary along the firm size distribution (FSD)? To evaluate these questions, we construct a new dataset by matching data on firm-level capital raising activity with balance sheet data for 45,527 listed firms in 51 countries. Three main patterns emerge from the analysis. (1) Only a few large firms issue equity or bonds, and among them a small subset has raised a large proportion of the funds raised during the 1990s and 2000s. (2) Issuers grow faster than non-issuers in terms of assets, sales, and employment, that is, firms do not simply use securities markets to adjust their financial accounts. (3) The FSD of issuers evolves differently from that of non-issuers, tightening among issuers and widening among non-issuers.
    Keywords: Access to Finance, Bond Markets, Capital Market Development, Capital Raisings, Firm Dynamics, Firm Financing, Stock Markets
    JEL: G00 G10 G31 G32 L25
    Date: 2015–08
  3. By: Jürgen Janger
    Abstract: Policies towards business science links have been driven by the concept of the entrepreneurial university, i.e. encouraging universities to directly contribute to economic development through commercialization of their discoveries, e.g. through licensing of patents or start-ups, but also through collaborative R&D with firms. However, efforts to increase the entrepreneurship of universities have seldom targeted the first two missions of universities, research and teaching. Evidence shows that any entrepreneurship can only be as strong as the quality of research and teaching. Based on a conceptual model of universities’ role in innovative activity and a review of the evidence, this paper has tried to argue that a narrow focus on linking universities with firms and society without making sure that universities’ first two missions - research and teaching - work well is an ineffective approach towards increasing the contribution of universities to innovative activity, and hence to a new growth path. In particular, the role of training graduates is not stressed enough, while by far the biggest contribution of universities to innovative activities.
    Date: 2015–08
  4. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Charoensivakorn, Phadet (Asian Development Bank Institute); Niraula, Baburam (Asian Development Bank Institute)
    Abstract: Small and medium-sized enterprises (SMEs) are the backbone of most Asian economies. The main obstacle to the development of the SME sector is the lack of stable finance. Considering the bank-dominated characteristic of economies in Asia, banks are the main source of financing, and the lack of a comprehensive credit rating database has been a bottleneck for SMEs. This paper examines how a credit rating scheme for SMEs can be developed, when access to other financial and non-financial ratios is not possible, by using data on lending by banks to SMEs. We employ statistical techniques on five variables from a sample of Thai SMEs and classify them into subgroups based on their financial health. By employing these techniques, banks could reduce information asymmetry and consequently set interest rates and lending ceilings for SMEs. This would ease financing to healthy SMEs and reduce the amount of non-performing loans to this important sector.
    Keywords: credit risk analysis; SMEs; bank lending; Thailand
    JEL: G21 G23 G24 G32
    Date: 2015–09–04
  5. By: Anthony Dhieux (IAE Lille - Institut d'Administration des Entreprises - Lille - Université Lille 1 - Sciences et technologies); Eric Severin (IAE Lille - Institut d'Administration des Entreprises - Lille - Université Lille 1 - Sciences et technologies); Ludovic Vigneron (GERME - Université Lille II - Droit et santé)
    Abstract: In this study, we examine the link between accrual quality and SMEs’ use of trade credit. Using a sample of 3591 small businesses observed between 2005 and 2012, we provide evidences of a negative impact of a good quality of accruals on SME’s use of trade credit. We also provide evidence that suppliers limit trade credit for firms for which accrual quality is harder to anticipate. Suppliers can deal with low quality of accruals but only if their relationship with the small business allows them to correct related bias.
    Abstract: Dans cette étude, nous examinons le lien entre la qualité de l’information financière diffusée par une PME et le recours de celle-ci au crédit fournisseur pour le financement de son activité. A partir, d’un échantillon de 3591 entreprises observés sur la période 2005-12, nous mettons en évidence un lien négatif entre la qualité de l’information comptable mesuré par la qualité des « accruals » et le recours au crédit fournisseurs. Les fournisseurs financent ainsi les entreprises les plus opaques qui peinent à accéder au crédit bancaire. Nous mettons également en évidence le fait que les fournisseurs limitent leur concours aux PME pour lesquels l’incertitude sur la qualité des « accruals » est importante. Les fournisseurs s’accordent ainsi d’une faible qualité de l’information comptable à condition de pouvoir l’anticipé.
    Date: 2015–05–19
  6. By: Dominique Barbelivien (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)
    Abstract: Notre travail vise à contribuer à la connaissance de la structuration du contrôle de gestion des PMI familiales en croissance. Nous souhaitons concourir à la réflexion sur la managérialisation des PMI, en apportant ici un éclairage particulier intégrant le caractère familial et son impact sur la façon dont la fonction contrôle de gestion et ses outils de gestion sont choisis et utilisés afin de respecter le caractère entrepreneurial et familial de l'entreprise. Nous procédons par une étude comparative exploratoire de la structuration de l'instrumentation de gestion au sein de deux PMI dont les trajectoires de croissance récentes sont similaires et révèlent la nécessité d'affiner le pilotage des activités. Nous démontrons que les attributs choisis pour le contrôle de gestion tentent de concilier les valeurs de ces entreprises familiales (proximité du dirigeant avec son terrain économique et ses parties prenantes, management clanique basé sur la confiance et poids élevés des relations informelles) avec la nécessité de rationaliser les processus de décision.
    Date: 2015–05–19

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