NBER Publications by Eric Bond

Relative to their counterparts in high-income regions, entrepreneurs in developing countries face less efficient financial markets, more volatile macroeconomic conditions, and higher entry costs. This paper develops a dynamic empirical model that links these features of the business environment to firm ownership patterns, firm size distributions, productivity distributions, borrowing patterns, and cross-household savings behavior. Applied to panel data on Colombian apparel producers, the model yields econometric estimates of a credit market imperfection index, the sunk costs of creating a new business, and various other parameters. It also provides a basis for several counterfactual experiments. These show, inter alia, that an efficient credit market would improve the weighted-average effi...