Do credit constraints matter more for college dropout entrepreneurs?
by Arndt Werner
International Journal of Entrepreneurship and Innovation Management (IJEIM), Vol. 14, No. 2/3, 2011

Abstract: The purpose of this study is to shed some light on the relationship between the educational background of entrepreneurs and their ability to get financial resources from banks. Start-ups and their potential lenders are faced with severe problems of asymmetric information regarding the evaluation of entrepreneurial capabilities due to the lack of a production history and reputation. To reduce the informational gap, banks could be expected to use college graduation experience as an observable signal for the underlying quality of the new firm when deciding to grant a credit to a founder. We empirically test our hypothesis, using a dataset of 189 German start-ups. Our hypothesis is borne out by the data. Under the control of various individual characteristics, we find college dropouts have more difficulties to obtain credit in the start-up phase than founders who did not drop out of college.

Online publication date: Tue, 30-Sep-2014

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Entrepreneurship and Innovation Management (IJEIM):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com