Credit accessibility, institutional deficiency and entrepreneurship in China Academic Article

abstract

• 2018 Elsevier Inc. Using a brand new data, we document seriously low credit accessibility from financial institutes for small and micro enterprises (SMEs) and examine whether and how it affects entrepreneurial activity in China. We find that credit constraints significantly decrease the possibility of households becoming entrepreneurs. Based on our estimates, 10% decrease in the probability of being credit constrained would be associated with 4.3 million newly-created household businesses, or equivalently 11 million jobs. In the end, factors that determine credit accessibility are exploited and the result indicates that institutional deficiency plays a role in shaping the pattern of financing difficulties in China. Specifically, we find households in regions with more commercialized banking or those with government-sector workers are more likely to access to credit when other relevant variables are conditioned. In particular, the positive role of government-sector workers is more pronounced in regions with weaker market institutions.

authors

• Gan, Li

published proceedings

• CHINA ECONOMIC REVIEW

author list (cited authors)

• Ma, S., Wu, X. i., & Gan, L. i.

citation count

• 20

complete list of authors

• Ma, Shuang||Wu, Xi||Gan, Li

publication date

• January 2019

publisher

• Elsevier  Publisher

published in

• China Economic Review (Amsterdam)  Journal

keywords

• China
• Credit Accessibility
• Entrepreneurship
• Household Finance
• Institutional Deficiency

Digital Object Identifier (DOI)

• 10.1016/j.chieco.2018.10.015

start page

• 160

end page

• 175

volume

• 54

URL

• http://dx.doi.org/10.1016/j.chieco.2018.10.015

user-defined tag

• 8 Decent Work and Economic Growth