IDEAS home Printed from https://ideas.repec.org/a/sae/urbstu/v57y2020i16p3347-3362.html
   My bibliography  Save this article

Urban house prices and investments in small and medium-sized industrial firms: Evidence from provinces of Iran

Author

Listed:
  • Hassan F. Gholipour

Abstract

Using data from provinces of Iran from 2005 to 2016 and applying panel cointegrating regressions, I find that increases in real house prices have a negative and statistically significant effect on investments in small and medium-sized industrial firms. There are at least three possible mechanisms through which increases in house prices adversely affect industrial entrepreneurship. They (1) generate housing construction investment opportunities with high returns, (2) attract many urban adults with tertiary education to the real estate brokerage industry, and (3) encourage people to save more to buy houses (which is one of the prerequisites for marriage in Iran).

Suggested Citation

  • Hassan F. Gholipour, 2020. "Urban house prices and investments in small and medium-sized industrial firms: Evidence from provinces of Iran," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3347-3362, December.
    • Handle: RePEc:sae:urbstu:v:57:y:2020:i:16:p:3347-3362
    DOI: 10.1177/0042098019897887
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0042098019897887
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0042098019897887?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Binder, Michael & Hsiao, Cheng & Pesaran, M. Hashem, 2005. "Estimation And Inference In Short Panel Vector Autoregressions With Unit Roots And Cointegration," Econometric Theory, Cambridge University Press, vol. 21(4), pages 795-837, August.
    2. Martin C. Schmalz & David A. Sraer & David Thesmar, 2017. "Housing Collateral and Entrepreneurship," Journal of Finance, American Finance Association, vol. 72(1), pages 99-132, February.
    3. Esfahani, Hadi Salehi & Mohaddes, Kamiar & Pesaran, M. Hashem, 2013. "Oil exports and the Iranian economy," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(3), pages 221-237.
    4. Li, Lixing & Wu, Xiaoyu, 2014. "Housing price and entrepreneurship in China," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 436-449.
    5. Stefano Corradin & Alexander Popov, 2015. "House Prices, Home Equity Borrowing, and Entrepreneurship," The Review of Financial Studies, Society for Financial Studies, vol. 28(8), pages 2399-2428.
    6. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 99-125.
    7. Hadi Salehi Esfahani & Kamiar Mohaddes & M. Hashem Pesaran, 2014. "An Empirical Growth Model For Major Oil Exporters," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(1), pages 1-21, January.
    8. Hilde C. Bjørnland & Leif A. Thorsrud, 2016. "Boom or Gloom? Examining the Dutch Disease in Two‐speed Economies," Economic Journal, Royal Economic Society, vol. 126(598), pages 2219-2256, December.
    9. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    10. Warnock, Veronica Cacdac & Warnock, Francis E., 2008. "Markets and housing finance," Journal of Housing Economics, Elsevier, vol. 17(3), pages 239-251, September.
    11. Ellis Connolly & Gianni La Cava & Matthew Read, 2015. "Housing Prices and Entrepreneurship: Evidence for the Housing Collateral Channel in Australia," RBA Annual Conference Volume (Discontinued), in: Angus Moore & John Simon (ed.),Small Business Conditions and Finance, Reserve Bank of Australia.
    12. Balasubramanyan, Lakshmi & Coulson, Edward, 2013. "Do house prices impact business starts?," Journal of Housing Economics, Elsevier, vol. 22(1), pages 36-44.
    13. Robert W. Fairlie & Harry A. Krashinsky, 2012. "Liquidity Constraints, Household Wealth, And Entrepreneurship Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(2), pages 279-306, June.
    14. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
    15. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    16. Gholipour, Hassan F. & Farzanegan, Mohammad Reza, 2015. "Marriage crisis and housing costs: Empirical evidence from provinces of Iran," Journal of Policy Modeling, Elsevier, vol. 37(1), pages 107-123.
    17. Liddle, Brantley, 2012. "The importance of energy quality in energy intensive manufacturing: Evidence from panel cointegration and panel FMOLS," Energy Economics, Elsevier, vol. 34(6), pages 1819-1825.
    18. Adelino, Manuel & Schoar, Antoinette & Severino, Felipe, 2015. "House prices, collateral, and self-employment," Journal of Financial Economics, Elsevier, vol. 117(2), pages 288-306.
    19. Mohammad Reza Farzanegan & Hassan Fereidouni Gholipour, 2016. "Divorce and the cost of housing: evidence from Iran," Review of Economics of the Household, Springer, vol. 14(4), pages 1029-1054, December.
    20. Rong, Zhao & Wang, Wenchun & Gong, Qiang, 2016. "Housing price appreciation, investment opportunity, and firm innovation: Evidence from China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 34-58.
    21. Mohammad Reza Farzanegan & Pooya Alaedini (ed.), 2016. "Economic Welfare and Inequality in Iran," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-95025-6.
    22. Hassan F. Gholipour & Muhammad Najib Razali, 2017. "Determinants of financial performance of real estate brokerage industry in Iran," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 10(4), pages 489-502, July.
    23. Mohammad Reza Farzanegan, 2014. "Can oil-rich countries encourage entrepreneurship?," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 26(9-10), pages 706-725, December.
    24. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    25. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
    26. Black, Jane & de Meza, David & Jeffreys, David, 1996. "House Price, the Supply of Collateral and the Enterprise Economy," Economic Journal, Royal Economic Society, vol. 106(434), pages 60-75, January.
    27. Thai, Mai Thi Thanh & Turkina, Ekaterina, 2014. "Macro-level determinants of formal entrepreneurship versus informal entrepreneurship," Journal of Business Venturing, Elsevier, vol. 29(4), pages 490-510.
    28. Hsu, Po-Hsuan & Tian, Xuan & Xu, Yan, 2014. "Financial development and innovation: Cross-country evidence," Journal of Financial Economics, Elsevier, vol. 112(1), pages 116-135.
    29. Harding, John P. & Rosenthal, Stuart S., 2017. "Homeownership, housing capital gains and self-employment," Journal of Urban Economics, Elsevier, vol. 99(C), pages 120-135.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kerr, Sari Pekkala & Kerr, William R. & Nanda, Ramana, 2022. "House prices, home equity and entrepreneurship: Evidence from U.S. census micro data," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 103-119.
    2. Bracke, Philippe & Hilber, Christian A.L. & Silva, Olmo, 2018. "Mortgage debt and entrepreneurship," Journal of Urban Economics, Elsevier, vol. 103(C), pages 52-66.
    3. Ross Levine & Yona Rubinstein, 2018. "Selection into Entrepreneurship and Self-Employment," NBER Working Papers 25350, National Bureau of Economic Research, Inc.
    4. Jackson, Paul & Madison, Florian, 2022. "Entrepreneurial finance and monetary policy," European Economic Review, Elsevier, vol. 141(C).
    5. Han, Bing & Han, Lu & Zhou, Zhengyi, 2020. "Housing Market and Entrepreneurship: Micro Evidence from China," MPRA Paper 102597, University Library of Munich, Germany, revised 17 Aug 2020.
    6. Tiba, Sofien & Frikha, Mohamed, 2019. "The controversy of the resource curse and the environment in the SDGs background: The African context," Resources Policy, Elsevier, vol. 62(C), pages 437-452.
    7. Fan, Gang-Zhi & Li, Han & Li, Jiangyi & Zhang, Jian, 2022. "Housing property rights, collateral, and entrepreneurship: Evidence from China," Journal of Banking & Finance, Elsevier, vol. 143(C).
    8. Hu, Mingzhi & Su, Yinxin & Ye, Wenping, 2019. "Promoting or inhibiting: The role of housing price in entrepreneurship," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    9. Oh, Seungjoon & Lee, Jaeyoon & Choi, Bong-Geun, 2021. "The collateral channel: Dynamic effects of housing market on entrepreneurship," Economics Letters, Elsevier, vol. 198(C).
    10. Liu, Shimeng & Zhang, Sisi, 2021. "Housing wealth changes and entrepreneurship: Evidence from urban China," China Economic Review, Elsevier, vol. 69(C).
    11. Elitcha Koffi & Fonseca Raquel, 2018. "Self–Employment, Wealth and Start–up Costs: Evidence from a Financial Crisis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(3), pages 1-28, July.
    12. Bjørnland, Hilde C. & Thorsrud, Leif Anders & Torvik, Ragnar, 2019. "Dutch disease dynamics reconsidered," European Economic Review, Elsevier, vol. 119(C), pages 411-433.
    13. Jensen, Thais Laerkholm & Leth-Petersen, Søren & Nanda, Ramana, 2022. "Financing constraints, home equity and selection into entrepreneurship," Journal of Financial Economics, Elsevier, vol. 145(2), pages 318-337.
    14. Hansson, Åsa & Kopsch, Fredrik, 2020. "Property Values and the Likelihood of Self-Employment," Working Paper Series 1376, Research Institute of Industrial Economics.
    15. Hansson, Åsa & Kopsch, Fredrik, 2020. "Property Values and the Likelihood of Self-Employment," Working Papers 2020:26, Lund University, Department of Economics.
    16. Harding, John P. & Rosenthal, Stuart S., 2017. "Homeownership, housing capital gains and self-employment," Journal of Urban Economics, Elsevier, vol. 99(C), pages 120-135.
    17. Saleem Bahaj & Angus Foulis & Gabor Pinter, 2016. "The Residential Collateral Channel," Discussion Papers 1607, Centre for Macroeconomics (CFM), revised Jun 2016.
    18. Dina Azhgaliyeva, 2013. "What Makes Oil Revenue Funds Effective," International Conference on Energy, Regional Integration and Socio-economic Development 6023, EcoMod.
    19. Aymeric Bellon & J. Anthony Cookson & Erik P. Gilje & Rawley Z. Heimer, 2020. "Personal Wealth and Self-Employment," NBER Working Papers 27452, National Bureau of Economic Research, Inc.
    20. Hsuan-Hua Huang & Hsing-Wen Han & Kuang-Ta Lo & Tzu-Ting Yang, 2023. "Liquidity Constraints, Cash Windfalls, and Entrepreneurship: Evidence from Administrative Data on Lottery Winners," Papers 2303.17029, arXiv.org.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:urbstu:v:57:y:2020:i:16:p:3347-3362. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.gla.ac.uk/departments/urbanstudiesjournal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.