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Heterogeneity Effects Of Development Funding On Microenterprises

Author

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  • YUAN TIAN

    (Boston University, U.S.A.)

Abstract

This paper focuses on the heterogeneity of firm's characteristics on development funding. It develops a theoretical model under utility maximization framework with imperfect insurance and credit markets constraints, deriving the returns to capital determined by firm¡¯s size, structure and entrepreneur's utility form. Empirical evidence from Sri Lanka Microenterprises Project (2005-2010) shows that the returns vary across different quantiles of firm's profits and the ability/risk aversion of entrepreneur affects the returns significantly differently on the distribution of profits. It also summarizes the development funding policy and offers advice on policy evaluation in Sri Lanka.

Suggested Citation

  • Yuan Tian, 2015. "Heterogeneity Effects Of Development Funding On Microenterprises," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(3), pages 1-26, September.
    • Handle: RePEc:jed:journl:v:40:y:2015:i:3:p:1-26
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    References listed on IDEAS

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    1. McKenzie, David J & Woodruff, Christopher, 2006. "Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 3-42, October.
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    Cited by:

    1. Lahiri, Bidisha & Daramola, Richard, 2023. "Effects of credit and labor constraints on microenterprises and the unintended impact of changes in household endowments: Use of threshold estimation to detect heterogeneity," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 21-38.

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    Keywords

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    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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