Funding self-employment – the role of consumer credit

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper investigates whether self-employed households use consumer loans -in particular instalment loans and overdrafts -to finance business activities. Controlling for financial and non-financial household variables we show that self-employed households particularly use personal overdrafts significantly more often than employee households. When analyzing the correlation between consumer loan take-ups and consumption of selfemployed in comparison to employee households, we find first evidence that overdrafts are used by self-employed to finance their business as well. This indicates that intermingling constitutes a financing strategy when regular business loans might not be accessible.JEL Classification: G32, D12, D14

Do Entrepreneurs Really Earn Less?

“…Our investigation is based on German Micro-Census data 10 provided by the German Federal Statistical Office. The Micro-Census is a 9 In their study, Kneiding and Kritikos (2013) also reveal, similar to Åstebro and Chen (2014), that the median consumption spending of entrepreneurs is higher than that of wage earners. 10 The Micro-Census was started in 1957 as an annual survey of private households and persons in West Germany.…”

“…Martin (2013) using the German Socioeconomic Panel finds that selfemployed persons on average earn more than paid employees. Kneiding and Kritikos (2013) using data from the German 'Survey of Income and Consumption' show that average earnings of the self-employed are higher than those of paid employees. Fairlie (2005) studied young adults whose parents both have less than high school education.…”

The Effect of Cash Flow Problems and Resource Intermingling on Small Business Recovery and Resilience After a Natural Disaster

“…The intermingling of financial resources between the household and business have been extensively examined in the family business literature (Carter and Van Auken 2006 ; Haynes and Avery 1996 ; Haynes et al 1999 ; López-Gracia and Sánchez-Andújar 2007 ; McDonald and Marshall 2017 ; Muske et al 2009 ; Yilmazer and Schrank 2006 , 2010 ; Zuiker et al 2002 ). The use of bootstrapping methods among small firms has been documented in the small business finance literature (Kneiding and Kritikos 2013 ; Neeley and Van Auken 2009 ; Van Auken 2004 ; Winborg and Landström 2001 ). Other studies have examined how the family and business systems influence business resilience (Haynes et al 2011 ; Torres et al 2018 ).…”

Innovation Processes of Cymbopogon Citratus Tea in Manipur, India

“…The availability of external finance is a crucial success factor and, if impossible to obtain; it poses an obstacle for small and micro-enterprises around the world (Kneiding and Kritikos, 2013). The proprietor also needed money for materials, supplies, equipment, human resource, and their utilities and insurance to start the firm.…”