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Entrepreneurial finance, credit cards, and race

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  • Chatterji, Aaron K.
  • Seamans, Robert C.

Abstract

This paper examines the impact of financial deregulation on entrepreneurship. We assess the impact of credit card deregulation on transitions into self-employment using state-level removal of credit card interest rate ceilings following the US Supreme Court's 1978 Marquette decision as a quasi-natural experiment. We find that credit card deregulation increases the probability of entrepreneurial entry, with a particularly strong effect for black entrepreneurs. We demonstrate that these effects are magnified in states with a history of racial discrimination and link the results to discrimination-based barriers to entry.

Suggested Citation

  • Chatterji, Aaron K. & Seamans, Robert C., 2012. "Entrepreneurial finance, credit cards, and race," Journal of Financial Economics, Elsevier, vol. 106(1), pages 182-195.
  • Handle: RePEc:eee:jfinec:v:106:y:2012:i:1:p:182-195
    DOI: 10.1016/j.jfineco.2012.04.007
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    Cited by:

    1. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9883-5 is not listed on IDEAS
    2. Kyle Herkenhoff & Gordon Phillips & Ethan Cohen-Cole, 2017. "The Impact of Consumer Credit Access on Employment, Earnings, and Entrepreneurship," Working Papers 2017-011, Human Capital and Economic Opportunity Working Group.
    3. Kyle Herkenhoff & Gordon Phillips & Ethan Cohen-Cole, 2016. "The Impact of Consumer Credit Access on Employment, Earnings and Entrepreneurship," NBER Working Papers 22846, National Bureau of Economic Research, Inc.
    4. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9880-8 is not listed on IDEAS
    5. Aaron Chatterji & Edward Glaeser & William Kerr, 2014. "Clusters of Entrepreneurship and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 129-166.
    6. repec:spt:apfiba:v:8:y:2018:i:3:f:8_3_4 is not listed on IDEAS
    7. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9879-1 is not listed on IDEAS
    8. Sari Pekkala Kerr & William R. Kerr & Ramana Nanda, 2015. "House Money and Entrepreneurship," Harvard Business School Working Papers 15-069, Harvard Business School.
    9. Peter Debbaut & Andra C. Ghent & Marianna Kudlyak, 2013. "Are young borrowers bad borrowers? Evidence from the Credit CARD Act of 2009," Working Paper 13-09, Federal Reserve Bank of Richmond.

    More about this item

    Keywords

    Financial constraints; Entrepreneurship; Barriers to entry; Race;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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