Financing Entrepreneurship and the Old-Boy Network
We study entrepreneurs' start-up financing from banks and local financiers. An informal network, whose membership cannot be observed by outsiders, conveys the good signals it gets about the hidden types of network entrepreneurs to local financiers, which are then reflected in different loan terms. We show that there are winners and losers as a result of the network even among its members. Because all projects have positive net value, it is efficient to finance them even in the absence of a network. Thus, the formation of the network is inefficient as entrepreneurs incur networking costs for purely redistributive gains in the form of better loan terms as network members.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 22 (2013)
Issue (Month): 2 (06)
|Contact details of provider:|| Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/|
|Order Information:||Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yannis M. Ioannides & Linda Datcher Loury, 2002.
"Job Information Networks, Neighborhood Effects and Inequality,"
Discussion Papers Series, Department of Economics, Tufts University
0217, Department of Economics, Tufts University.
- Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
- Mark Casson & Marina Della Giusta (ed.), 2008. "The Economics of Networks," Books, Edward Elgar, number 2194, 6.
- de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
- Eren Inci, 2007.
"Occupational Choice and the Quality of Entrepreneurs,"
Boston College Working Papers in Economics
666, Boston College Department of Economics.
- Inci, Eren, 2013. "Occupational choice and the quality of entrepreneurs," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 1-21.
- Mehmet Bac & Eren Inci, 2010.
"The Old‐Boy Network and the Quality of Entrepreneurs,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 19(4), pages 889-918, December.
- Mehmet Bac & Eren Inci, 2010. "The Old-Boy Network and the Quality of Entrepreneurs," CESifo Working Paper Series 3071, CESifo Group Munich.
- Nofsinger, John R. & Wang, Weicheng, 2011. "Determinants of start-up firm external financing worldwide," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2282-2294, September.
- Parker, Simon C., 2008. "The economics of formal business networks," Journal of Business Venturing, Elsevier, vol. 23(6), pages 627-640, November.
- Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-67, July.
- Orzach, Ram & Tauman, Yair, 2005. "Strategic dropouts," Games and Economic Behavior, Elsevier, vol. 50(1), pages 79-88, January.
- Taylor, Curtis R, 2000. "The Old-Boy Network and the Young-Gun Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 871-91, November.
- Diamond, Douglas W., 1993. "Seniority and maturity of debt contracts," Journal of Financial Economics, Elsevier, vol. 33(3), pages 341-368, June.
- Scott Shane & Daniel Cable, 2002. "Network Ties, Reputation, and the Financing of New Ventures," Management Science, INFORMS, vol. 48(3), pages 364-381, March.
- Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-55, September.
- Bergemann, Dirk & Hege, Ulrich, 1997.
"Venture Capital Financing, Moral Hazard and Learning,"
CEPR Discussion Papers
1738, C.E.P.R. Discussion Papers.
- Bergemann, Dirk & Hege, Ulrich, 1998. "Venture capital financing, moral hazard, and learning," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 703-735, August.
- Pierre-Guillaume Méon & Khalid Sekkat, 2005.
"Does corruption grease or sand the wheels of growth?,"
Springer, vol. 122(1), pages 69-97, January.
- Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," ULB Institutional Repository 2013/7364, ULB -- Universite Libre de Bruxelles.
- Ramana Nanda & Tarun Khanna, 2007.
"Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry,"
Harvard Business School Working Papers
08-003, Harvard Business School, revised Feb 2009.
- Ramana Nanda & Tarun Khanna, 2010. "Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(4), pages 991-1012, December.
- Steven N. Kaplan & Per Stromberg, 2001. "Venture Capitalists As Principals: Contracting, Screening, and Monitoring," NBER Working Papers 8202, National Bureau of Economic Research, Inc.
- Bruderl, Josef & Preisendorfer, Peter, 1998. " Network Support and the Success of Newly Founded Businesses," Small Business Economics, Springer, vol. 10(3), pages 213-25, May.
- Naomi R. Lamoreaux & Kenneth L. Sokoloff (ed.), 2007. "Financing Innovation in the United States, 1870 to Present," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262122898, June.
When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:22:y:2013:i:2:p:232-258. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.