Year: 2007
Type: article
Study design: Observational Study
Abstract: This paper investigates which business starters experience credit rationing by simultaneously analyzing which business founders apply for credit and which are refused. We argue that credit denial depends largely on the entrepreneurs’ commitment and signals regarding the repayment of the loan and the success chances of the proposed business. Our empirical analysis is based on a sample of 1140 potential business starters in the Dutch county South Limburg. Our findings show that commitments drive the credit application and approval, while the effects of signals are mixed. The findings also suggest that business founders have a pretty good idea regarding whether their applications will be honored or not.
Source: Small Business Economics
Authors: Boris F. Blumberg, Wilko A. Letterie
Institution: Maastricht University
Language: English
Subfield: Management of Technology and Innovation
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,090
OpenAlex ID: W2142437382