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Finance and Growth for Microenterprises: Evidence from Rural China

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  • Beck, T.H.L.
  • Lu, L.
  • Yang, R.

    (Tilburg University, Center for Economic Research)

Abstract

Abstract: Using a survey dataset of Chinese rural households, we find that access to external finance is positively associated with the decision to become entrepreneur, the initial investment for microenterprises and the use of external finance. Also, we find that the use of informal finance is positively associated with sales growth of microenterprises with employees, but not of self-employed. We do not find any significant relationship between the use of formal finance and firm growth. Our findings underline the importance of finance for entrepreneurship and microenterprise growth, and the role of informal finance in the absence of efficient formal financial institutions.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2013-053.

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Date of creation: 2013
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Handle: RePEc:dgr:kubcen:2013053

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Web page: http://center.uvt.nl

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Keywords: Finance; Entrepreneurship; Growth; China;

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