NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Thais Lærkholm Jensen

Department of Economics
University of Copenhagen
Oster Farimagsgade 5
Building 26
DK-1353 Copenhagen K
Denmark

E-Mail: tlj@econ.ku.dk

NBER Working Papers and Publications

October 2014Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform
with Søren Leth-Petersen, Ramana Nanda: w20583
We study how a mortgage reform that exogenously increased access to credit had an impact on entrepreneurship, using individual-level micro data from Denmark. The reform allows us to disentangle the role of credit access from wealth effects that typically confound analyses of the collateral channel. We find that a $30,000 increase in credit availability led to a 12 basis point increase in entrepreneurship, equivalent to a 4% increase in the number of entrepreneurs. New entrants were more likely to start businesses in sectors where they had no prior experience, and were more likely to fail than those who did not benefit from the reform. Our results provide evidence that credit constraints do affect entrepreneurship, but that the overall magnitudes are small. Moreover, the marginal individual...
 
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