We explore how financial constraints distort the entry decisions among otherwise productive entrepreneurs and limit growth of promising young firms. A model of liquidity-constrained entrepreneurs suggests that the easing of credit constraints can induce more entry of firms with greater long-run...

SME investment opportunities depend on the level of financing constraints that firms face. Earlier research has mainly focused on the controversial argument that cash flow-investment correlations increase with the level of these constraints. We focus on bank loans rather than cash flow. Our...

We analyze the principal objectives and constraints of small and medium enterprises (SMEs), using data from a survey of 437 top managers (CEOs) of SMEs in Russia and Bulgaria. The CEOs display similar views and identify a small number of specific constraints as being the most important ones. The...

This article investigates empirically whether and to what extent initial capital constraints hinder entrepreneurial performance once the venture has been started. Prior empirical research in this area could investigate this issue only indirectly by lack of data. The key contribution of this...

The financial crisis has brought to the fore concerns regarding small- and medium-sized enterprises' (SMEs) capacity to access traditional bank lending. Using European firm-level data on SME access to finance since the onset of the financial crisis, we find that bank-lending constrained SMEs are...

Reliable information on small and medium sized enterprises (SMEs) is rare and costly for financial intermediaries. To compensate for this, relationship banking is often considered as the appropriate lending technique in the case of SMEs. In this paper we offer a theoretical model to analyze the...

This paper seeks to understand household business decisions in response to increased credit access in an environment with multiple market failures. A simple model suggests that households at certain wealth thresholds might be able to overcome the fixed costs of entering entrepreneurship when...