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Funding self-employment -- the role of consumer credit

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  • Christoph Kneiding
  • Alexander S. Kritikos

Abstract

This article investigates whether self-employed households use consumer loans -- in particular, instalment loans and overdrafts -- to finance business activities. Controlling for financial and nonfinancial household variables, we show that self-employed households particularly use personal overdrafts significantly more often than employee households. When analysing the correlation between consumer loan take-ups and consumption of self-employed in comparison to employee households, we find first evidence that overdrafts are used by self-employed to finance their business as well. This indicates that intermingling constitutes a financing strategy when regular business loans might not be accessible.

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File URL: http://hdl.handle.net/10.1080/00036846.2011.637895
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 45 (2013)
Issue (Month): 13 (May)
Pages: 1741-1749

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Handle: RePEc:taf:applec:45:y:2013:i:13:p:1741-1749

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Cited by:
  1. Åstebro, Thomas & Chen, Jing, 2014. "The entrepreneurial earnings puzzle: Mismeasurement or real?," Journal of Business Venturing, Elsevier, vol. 29(1), pages 88-105.
  2. Alexander Kritikos & Christoph Kneiding & Claas Christian Germelmann, 2009. "Demand Side Analysis of Microlending Markets in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 229(5), pages 523-543, October.

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