A model of collateral, investment, and adverse selection

This paper characterizes the relationship between entrepreneurial wealth and aggregate investment under adverse selection. Its main finding is that such a relationship need not be monotonic. In particular, three results emerge from the analysis: (i) pooling equilibria, in which investment is independent of entrepreneurial wealth, are more likely to arise when entrepreneurial wealth is relatively low; (ii) separating equilibria, in which investment is increasing in entrepreneurial wealth, are most likely to arise when entrepreneurial wealth is relatively high and; (iii) for a given interest rate, an increase in entrepreneurial wealth may generate a discontinuous fall in investment.     

新教改革的经济学分析

本文旨在从经济层面解释新教教会最初的成败。本文认为,通过操纵教义、排除异己以及各种形式的价格歧视,中世纪的罗马天主教会最终将其寻求Z商品“精神服务”的信徒置于叛教的边缘。这种垄断的做法鼓励了竞争对手的进入,其中有些对手与国内政府是同盟。本文假定,以封建制衰落、财富分配相对不稳定为特征的新兴企业家社会鼓励新教的进入,而主要是挥霍而不是创造财富的更具同质性的寻租社会则阻碍新教的进入。在这些社会中,罗马教会更有可能延续其价格歧视的做法。通过将长子继承制和城市增长作为财富稳定性的替代指标,可以对这一命题进行非正式的检验。     

Endogenous Persistent Occupations and Inequality

The paper argues that human capital is the leading force determining inequality persistence. We show that, in a context of a perfect capital market where agents inherit human capital and wealth, it is the inherited human capital level that determines agents' occupational choice and investment. The critical assumption is that the entrepreneurial activity is of increasing returns to scale. This creates a higher profile of revenue for entrepreneurs. Although every agent can choose to become an entrepreneur, and although there is no barrier of entry in entrepreneurship, only those who receive a relatively higher human capital will do so. Agents whose inherited human capital is lower than the human capital threshold, endogenously determined, are better off becoming workers. Even in the context of a perfect capital market, which allows less endowed agents to borrow and invest in education, it turns out that the agents who inherit a low level of human capital bear a greater utility cost in their education investment. So they are better off investing less in education, lending their savings, and working as workers. As a result, agents' occupational choice depends on the intergenerational transmission of human capital. In the long run, the population is polarized into the rich entrepreneurs and the poor workers, magnifying inequality persistence in human capital level and revenue.     

Can entrepreneurship bring happiness? Evidence from China

This paper investigates the relationship between entrepreneurial activities and the happiness of entrepreneurs. We estimate the effects of entrepreneurial decision-making, business experience and other factors on happiness by using China Household Finance Survey data. Our results derived from maximum likelihood estimation methods indicate that entrepreneurial decision-making and entrepreneurial experience affect household happiness significantly. The family well-being is significantly increased if the family is entrepreneurial, and it will be higher if actively entrepreneurial. Both entrepreneurial experience and entrepreneurial investment of time have significantly positive effect on the probability of family well-being. In addition, we find that the mechanism by which entrepreneurship brings happiness to households is through raising household income and wealth, that is, income effects and wealth effects.     

产业转型升级中的民企承继问题——以“富二代”接班议题为例

从经济社会学视角审视产业转型升级研究,其间涉及到社会分层的合理化、企业承继,以及产业组织化等议题。本文以民营企业"富二代"接班为例,借助于诺斯的"共享心智模型"理念,探求了民营企业财富与运营控制权的代际传承与产业转型升级之间的关联。本文结论的是,企业承继涉及到的不只是产业特征和经营特质等物质财富问题,更关联到心灵财富问题,即基于"国家(政府)-市场-社会"逻辑框架上"心智"的转型升级。     

Entrepreneurial Migration in an Integrated World

A growing number of developed countries offer entrepreneurial visas as a means of attracting entrepreneurial talent and capital. In this paper, we use a simple two‐sector model of international trade with heterogeneous agents and financial frictions to show that entrepreneurial migration can contribute to the international efficiency of production, even when capital also flows internationally through borrowing and lending and foreign direct investment. In our model, all cross‐border transactions are motivated by cross‐country variations in the quality of financial institutions.     

产业转型升级中的民企承继问题--以“富二代”接班议题为例

从经济社会学视角审视产业转型升级研究，其间涉及到社会分层的合理化、企业承继，以及产业组织化等议题。本文以民营企业“富二代”接班为例，借助于诺斯的“共享心智模型’’理念，探求了民营企业财富与运营控制权的代际传承与产业转型升级之间的关联。本文结论的是，企业承继涉及到的不只是产业特征和经营特质等物质财富问题，更关联到心灵财富问题，即基于“国家（政府）一市场一社会”逻辑框架上“心智”的转型升级。     

How have banks fared following a borrower's financial distress?

This paper is the first to study the impact of a borrower's reorganization filing on its lead lending bank and second lending bank. This study analyzes 96 reorganization filings in Taiwan during the period 1995–2006. It is substantiated that the market's reaction to these filings is not indiscriminate and that the forbearance lending to a reorganization filing borrower suggests the lead bank's little concern for its shareholder wealth.     

Persistent poverty and informal credit

This paper explores the consequences of nonlinear wealth dynamics for the formation of bilateral credit arrangements to help manage idiosyncratic risk. Using original data on expected wealth dynamics, social networks and informal loans among southern Ethiopian pastoralist households, we find that the threshold at which expected wealth dynamics bifurcate serves as a focal point at which lending is concentrated. Informal lending responds to recipients' losses but only so long as the recipients are not “too poor”. Our results suggest that when shocks can have long term effects, loans are best understood as providing a safety net rather than a scale-neutral insurance mechanism. Furthermore, the persistently poor are excluded from social networks that are necessary to obtain loans given in response to shocks.     

Adverse selection in credit markets and regressive profit taxation

In many countries, taxes on businesses are less progressive than labor income taxes. This paper provides a justification for this pattern based on adverse selection that entrepreneurs face in credit markets. Individuals choose between becoming entrepreneurs or workers and differ in their skill in both of these occupations. I find that endogenous cross-subsidization in the credit market equilibrium results in excessive (insufficient) entry of low-skilled (high-skilled) agents into entrepreneurship. This gives rise to a corrective role for differential taxation of entrepreneurial profits and labor income. In particular, a profit tax that is regressive relative to taxes on labor income restores the efficient occupational choice.     

The rise of female entrepreneurs: New evidence on gender differences in liquidity constraints

In this paper, we study the importance of liquidity constraints for entrepreneurial activity, using previously unexplored data from the UK. Using inheritances as an instrument, IV estimates reveal that single women drive the overall relationship between personal wealth and the propensity to start a new business. Defining business ownership rather than self-employment as the entrepreneurial outcome measure is also shown to be critical. Using self-employment leads to selection bias and underestimates the impact of personal wealth. The results imply that efforts aimed at relieving the liquidity constraints of single women could help further accelerate the recent rise of female entrepreneurship.     

Entrepreneurship,Saving, and Social Mobility

This paper examines entrepreneurship in order to analyze, first, the degree to which the opportunity to start or own a business affects the household's saving behavior and the implication of this behavior for the distribution of wealth and, second, the relationship between the extent of entrepreneurship in the economy and socioeconomic mobility, that is, the movement of families across wealth classes over time.First, a number of stylized facts based on data from the Panel Study of Income Dynamics and the Survey of Consumer Finances are outlined. They show relevant differences in asset holdings and wealth mobility between entrepreneurs and workers. Second, a dynamic general equilibrium model with an explicit formalization of the entrepreneurial choice is developed. Through the modeling of the entrepreneurial activities, the model generates a concentration of wealth similar to the one observed in the U.S. economy and it replicates the main patterns of wealth mobility in which entrepreneurs experience higher upward mobility than workers. Journal of Economic Literature Classification Numbers: E21, D31, J23     

CREDIT RATIONING,RISK AVERSION,AND INDUSTRIAL EVOLUTION IN DEVELOPING COUNTRIES

Relative to their counterparts in high‐income regions, entrepreneurs in developing countries face less efficient financial markets, more volatile macroeconomic conditions, and higher entry costs. This article develops a dynamic empirical model that links these features of the business environment to cross‐firm productivity distributions, entrepreneurs’ welfare, and patterns of industrial evolution. Fit to panel data on Colombian apparel producers, the model yields estimates of a credit market imperfection index, the sunk costs of creating a new business, and various technology parameters. Model‐based counterfactual experiments suggest that improved intermediation could dramatically increase the return on assets for entrepreneurial households with modest wealth.     

Fashion and wealth accumulation

Summary. This paper examines the influence of fashion on wealth accumulation in an economy with two groups of agents. Fashion is modelled as an externality generated by a particular dependence of individual agents' time preference on the two groups' per-capita consumption habits. It is shown that fashion causes excessive wealth fluctuations in the sense that stronger and more persistent fashion is more likely to generate limit cycles in wealth. Opposite to intuitive arguments , however, the externality in fashion does not necessarily generate instability in wealth. In a special case, equilibrium consumption and wealth are stable but the optimal ones that internalize the externality are locally unstable. Whether equilibrium consumption is excessive relative to optimal consumption depends on the distribution as well as the aggregate level of wealth. Received: December 15, 1995; revised version: July 21, 1998     

Sovereign Debt Capacity and the Distribution of Domestic Wealth: A Common Agency Model*

This paper proposes a stylized two‐period, two‐country model illustrating the role of distribution of domestic wealth in determining a country's level of access to international lending. We model sovereign debt redemption policy in a common agency framework. Within this framework, policy is the outcome of the interaction between government and local and foreign interest groups with conflicting preferences on debt repayment. Our main result is that in full lobby competition, when all interests are represented, the only equilibrium solution is repudiation and the consequent inability of government to access international capital markets. Conversely, when the ability to lobby depends on wealth, governments can access international credit up to a given maximum external debt capacity, determined by the skew in the distribution of domestic wealth.     

产业发展效率视角的企业家行为配置研究新进展

企业家生产性行为的合理配置直接决定着经济结构变迁和产业发展效率。具体来说：企业家对产业目标市场的进入与退出能力和水平决定了产业发展的方向以及产业结构之间的合理性;企业家的生产性产业投资行为与水平决定了产业发展的速度;企业家的技术选择和技术吸收能力决定了产业发展的质量和产业结构的高级化;企业家对生产组织与生产方式选择的生产性行为也与产业发展效率直接关联。本文对国外这几个方面研究的最新进展进行了文献回顾与述评。     

Endogenous fiscal policies,environmental quality,and status-seeking behavior

This paper analyzes endogenous fiscal policy in an endogenous growth model where agents care about social status and environmental quality. The quest for a higher status is assimilated to a preference for capital wealth. The government uses income tax to finance infrastructure and environmental protection. We find that accounting for preferences for social status and environmental quality may lead to an allocation of tax revenue in favor of a cleanup effort to the detriment of infrastructure. Economic growth is not necessarily and negatively affected by this allocation as it is partly explained by an excessive accumulation of capital wealth due to the quest of status. Status seeking can however harm economic growth and environmental quality when its motive is important enough. Finally, we show that economic growth may be consistent with environmental preservation but is not necessarily welfare-improving as in the case of absence of status-seeking behavior.     

Modes of foreign bank entry and effects on lending rates: Theory and evidence

Policy makers who decide to liberalize foreign bank entry frequently put limitations on the mode of entry. We study how different entry modes affect the lending rates of foreign and domestic banks. In our model, the mode of entry determines whether a foreign bank inherits a customer base. This, in turn, affects how information is distributed between foreign and domestic banks. We show that this distribution of information about incumbent customers leads to stronger competition if foreign entry occurs through a greenfield investment. As a result, domestic bank lending rates are lower after greenfield entry. We find empirical support for this prediction for a sample of banks from 10 Eastern European countries for the period 1995–2003.     

Lender's risk incentive and debt concession

This paper demonstrates that a lender's risk incentive may render it difficult to conduct efficient debt renegotiation. When a lending bank has a risk incentive, the bank is not likely to make a debt concession, even though such a concession could resolve inefficiencies caused by a borrower's risk incentive. If the lender refrains from renegotiation the debt, then the borrowing firm chooses a value-decreasing risky project. As a result, the cash flow that the lending bank collects becomes risky, and the wealth of the bank's shareholders increases. The lender's risk incentive thus accelerates the borrower's risk incentive.