@techreport{Schafer2006Small,
abstract = {In this paper we investigate whether small-scale businesses face financial constraints that affect their survival. We develop a model of moral hazard in which financial constraints arise endogenously. The model predicts that higher private assets relax financial constraints and have a positive effect on the firm's probability of survival. We test this proposition using German Socio-Economic Panel (GSOEP) data, which cover the period 1984{2004. The release from financial constraints is measured by inheritance. The empirical analysis confirms that the entrepreneur has a higher propensity to stay in business when she inherits capital. This effect is particularly strong for entrepreneurs that switch from self-employment into wage employment. These results are consistent with hypothesis that financial frictions have a perceptible impact on bankruptcy among small business firms.},
address = {Berlin},
author = {Dorothea Sch\"{a}fer and Oleksandr Talavera},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {G30; J20; L10; 330; Entrepreneurship; survival; financial constraints},
language = {eng},
number = {636},
publisher = {Deutsches Institut f\"{u}r Wirtschaftsforschung (DIW)},
title = {Small-Scale Business Survival and Inheritance: Evidence from Germany},
type = {DIW-Diskussionspapiere},
url = {http://hdl.handle.net/10419/18529},
year = {2006}
}
