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Access to Credit and Entrepreneurship: Evidence from China

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  • Ni Qin
  • Dongmin Kong

Abstract

This study investigates the impact of improved access to credit on entrepreneurship. We exploit a quasi-natural experiment—namely, the Postal Savings Bank of China gaining official approval in 2006 to launch its own loan business—to establish causality. Findings reveal that improved access to credit has sizeable positive effects on entrepreneurship, especially in capital-intensive industries and areas with high levels of government institutional quality. Our results are robust to different specifications and alternative measures. Two plausible mechanisms driving our findings are financial constraints and increased demand. Estimations based on the individual-level data of self-employment further support our findings. We also find evidence that access to credit can increase regional employment and business survival rate.

Suggested Citation

  • Ni Qin & Dongmin Kong, 2022. "Access to Credit and Entrepreneurship: Evidence from China," Economic Development and Cultural Change, University of Chicago Press, vol. 71(1), pages 295-331.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/714440
    DOI: 10.1086/714440
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    Cited by:

    1. Wu, Jinshun & Wu, Luyao, 2023. "Impacts of digital inclusive finance on household entrepreneurship," Finance Research Letters, Elsevier, vol. 56(C).
    2. Ablam Estel Apeti & Jean-Louis Combes & Eyah Denise Edoh, 2023. "Entrepreneurship in developing countries: can mobile money play a role?," Working Papers hal-04081304, HAL.

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