Funding Self-Employment:The Role of Consumer Credit

This paper investigates whether self-employed households use consumer loans – inparticular instalment loans and overdrafts – to finance business activities. Controlling forfinancial and non-financial household variables we show that self-employed householdsparticularly use personal overdrafts significantly more often than employee households.When analyzing the correlation between consumer loan take-ups and consumption of selfemployedin comparison to employee households, we find first evidence that overdrafts areused by self-employed to finance their business as well. This indicates that interminglingconstitutes a financing strategy when regular business loans might not be accessible...