Does Bankruptcy Law Affect Business Turnover? Evidence From New and Existing Business

Rohlin, Shawn M.; Ross, Amanda

doi:10.1111/ecin.12230

Cited by 18 publications

(12 citation statements)

References 33 publications

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“…The authors look at how the program affected firm deaths, and find no evidence that the program was simply creating more business turnover. This is also consistent with the work ofRohlin and Ross (2016), which considers the effect of bankruptcy law on business turnover and found that if anything more generous bankruptcy exemptions increase the number of existing businesses, likely because the more generous protections in bankruptcy encourage entrepreneurs to incur the risk of opening their own business Rohlin, Rosenthal, and Ross (2014). further consider how differences in policy may cause sorting of different types of business activity across state boundaries.3 In their research, the authors look at how differences in state tax policy affect the relative sorting of business activity across state lines.…”

supporting

confidence: 93%

Designing Policies to Spur Economic Growth: How Regional Scientists Can Contribute to Future Policy Development and Evaluation

Patrick

Ross

Stephens

2017

Regional Research Frontiers - Vol. 1

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Policymakers at all levels of government try to design policies to promote economic growth. Many of these policies have a goal of attracting new businesses to an area, as new businesses are considered a key driver of local economic growth. An emerging literature suggests that such policies have heterogeneous effects on economic growth, both in terms of how the effect of the same policy may vary across locations as well as how different policies spur different types of growth. In this chapter, we discuss the insights provided by the existing literature on the effect of government policy on local economic growth. We pose questions that have not been fully answered, and for which the evidence is mixed, and discuss methodologies that future work should consider utilizing in order to answer these pressing issues. We also discuss the importance of data and the ideal types of data that should be collected and analyzed in the future. Evaluating the features and outcomes of policies will continue to be an important role for regional scientists over the next several decades, as government officials seek guidance when designing policy and allocating scarce resources.

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supporting

confidence: 93%

Designing Policies to Spur Economic Growth: How Regional Scientists Can Contribute to Future Policy Development and Evaluation

Patrick

Ross

Stephens

2017

Regional Research Frontiers - Vol. 1

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“…There has been an extensive discussion on how various factors, including tax policy and bankruptcy procedures, affect entrepreneurial activity (Borchers, Deskins, and Ross 2016;Bruce 2002;Bruce and Deskins 2012;Fan and White 2003;Georgellis and Wall 2006;Rohlin, Rosenthal, and Ross 2014;Rohlin and Ross 2016). However, the most frequently cited obstacle to becoming an entrepreneur is the large amount of financing needed to start a business.…”

Section: Existing Researchmentioning

confidence: 99%

Small Business Borrowing and Peer‐to‐peer Lending: Evidence From Lending Club

Nowak

Ross

Yencha

2017

Contemporary Economic Policy

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We investigate the ability of small business borrowers to signal to investors their credit worthiness through the use of text descriptions in the peer‐to‐peer lending market. Specifically, we examine the relationship between the loan description written by a borrower and whether or not the project is funded by investors. Using textual analysis, we find that small business loan descriptions can be used to predict the likelihood that the loan will be funded. We also find that an index, created from a textual analysis of the words used in the loan description, can forecast the performance of the loan, specifically whether or not the loan defaults. This index has the strongest impact when we focus on borrowers with low FICO scores, suggesting that for these individuals the description can signal information that standard measures used for lending purposes cannot. Overall, it appears as though investors are making investment decisions based on proper and relevant signals given by the borrowers through the loan description. (JEL D47, D53, D82, D83, G14, G21)

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“…They empirically confirm this using household level data. Rohlin and Ross (2015) uses the discontinuity in exemption levels across state borders and find that states with higher exemption levels attract more new businesses and also have positive effects on existing businesses. Similarly, I will find strong evidence that more generous homestead exemption increases small business births in MSA's.…”

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confidence: 99%

Entrepreneurship, small businesses and economic growth in cities

Lee¹

2016

J Econ Geogr

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Does entrepreneurship cause local employment and wage growth, and if so, how large is the impact? Empirical analysis of such question is difficult because of the joint determination of entrepreneurship and economic growth. This paper uses two different sets of variables-the homestead exemption levels in state bankruptcy laws from 1975 and the share of MSA overlaying aquifers-to instrument for entrepreneurship and examine urban employment and wage growth between 1993 and 2002. Despite using different sets of instrumental variables, the ranges of 2SLS estimates are surprisingly similar. A ten percent increase in the birth of small businesses increases MSA employment by 1.1 to 2.2%, annual payroll by 3.1 to 4.0%, and wages by 1.8 to 2.0% after ten years. Furthermore, an accounting exercise shows that the employment and payroll growth from entrepreneurship are not confined to the newly created businesses but spillover to the aggregate urban economy.

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Does Bankruptcy Law Affect Business Turnover? Evidence From New and Existing Business

Cited by 18 publications

References 33 publications

Designing Policies to Spur Economic Growth: How Regional Scientists Can Contribute to Future Policy Development and Evaluation

Designing Policies to Spur Economic Growth: How Regional Scientists Can Contribute to Future Policy Development and Evaluation

Small Business Borrowing and Peer‐to‐peer Lending: Evidence From Lending Club

Entrepreneurship, small businesses and economic growth in cities

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