title   
  

Financing entrepreneurship and the old-boy network

İnci, Eren and Parker, Simon C. (2013) Financing entrepreneurship and the old-boy network. Journal of Economics & Management Strategy (SI), 22 (2). pp. 232-258. ISSN 1058-6407 (Print) 1530-9134 (Online)

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Official URL: http://dx.doi.org/10.1111/jems.12009

Abstract

We study entrepreneurs' start-up financing from banks and local financiers. An informal network, whose membership cannot be observed by outsiders, conveys the good signals it gets about the hidden types of network entrepreneurs to local financiers, which are then reflected in different loan terms. We show that there are winners and losers as a result of the network even among its members. Because all projects have positive net value, it is efficient to finance them even in the absence of a network. Thus, the formation of the network is inefficient as entrepreneurs incur networking costs for purely redistributive gains in the form of better loan terms as network members.

Item Type:Article
Uncontrolled Keywords:entrepreneurship; financiers; networks; start-up financing
Subjects:H Social Sciences > HB Economic Theory
ID Code:21524
Deposited By:Eren İnci
Deposited On:06 May 2013 16:30
Last Modified:26 Feb 2016 15:47

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