Microeconometric Essays on Entrepreneurship
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Authors
Flanigan, Rachel M.
Issue Date
2023
Type
Dissertation
Language
Keywords
Arts markets , Behavioral finance , Credit supply shock , Entrepreneurship , Loan deterrence , SBA training
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Abstract
This dissertation empirically analyzes decisions taken to support the growth of small, young, entrepreneurial firms. It is a collection of three Microeconometric essays. These papers broadly fit within the field of Behavioral Empirical Microeconomics as they analyze the beliefs and biases of entrepreneurs. The first paper: Local Supply Shocks of Bank Credit Deter Young Firms from Loan Applications, co-authored with Frank M. Fossen, estimates changes in rates of young firms who are deterred from applying for commercial bank loans following a change in the credit supply due to their belief that they will be denied credit. By estimating short-run firm responses to an identified supply shock, we reveal unmet demand and inefficiencies in small business credit markets that have previously been masked in loan application and approval data due to the adverse selection problem in banking and a lack of information about individual entrepreneurs beliefs relative to their creditworthiness. The methodology for this paper is instrumental variable (IV) regression. We utilize start-up firm panel data from The Kauffman Firm Survey and lending data from U.S. Community Reinvestment Act mandated reporting. The second paper: Public Entrepreneurship Training for Startup Firms: Evidence from the Kauffman Firm Survey studies the selection decision of small young entrepreneurial firms into start-up firm specific entrepreneurship training. The Kauffman Firm Survey offers a unique opportunity to observe entrepreneurs who selected no training, private, and public training. I estimate outcomes relevant to the development of start-ups: survival, growth rates of profit, growth rates of employment, commercial bank loan applications, loan approvals, loan deterrence, and forecasting ability. I use probit propensity score matching methodology to analyze selection and differences in performance outcomes between training program types including U.S. Small Business Administration (SBA) training. The third paper: The Art Market as Keynes’ Beauty Contest with a $10,000 Prize, co-authored with Federico L. Guerrero estimates income differences between myopic and strategic artists. We discuss visual fine arts as assets and find an income premium at a threshold level of secondary market strategic awareness without full information. This study demonstrates incentives for content convergence in arts and cultural production.
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Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 United States