Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110151
Authors: 
Chakraborty, Tanika
Mukherjee, Anirban
Saha, Sarani
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8887
Abstract: 
In this paper we theoretically and empirically examine how the interaction between the formal court system and the informal loan network affects a household's decision to start a business. We find that when the formal court system is weak, expansion of informal credit network leads to the proliferation of business. However, with a sufficiently strong court system, expansion of credit network has a negative effect on business prospects. This result is explained by the contradictions between formal laws and norms used by informal networks. Our result remains robust after controlling for a variety of household and district level characteristics.
Subjects: 
informal network
court
formal institution
entrepreneurship
JEL: 
K12
L26
O17
Document Type: 
Working Paper

Files in This Item:
File
Size
332.34 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.