Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232922 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14170
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper studies the effects of private real estate collateral on entrepreneurial lending and entrepreneurial activity in the Netherlands. The residential collateral channel is especially relevant for sole-proprietors who own a business with unlimited liability. We used administrative data on outstanding bank credit based on all Dutch sole-proprietorships in the 2007-2013 period. Our results indicate that, during a severe economic crisis, home-owning entrepreneurs are affected less severely than renting entrepreneurs. Home ownership improved access to credit at the extensive and intensive margin, and it reduced the probability of exit. Positive home equity is the driving force behind this effect, as entrepreneurs with negative home equity are not treated significantly differently from renters.
Subjects: 
collateral lending channel
house price shocks
negative home equity
entrepreneurial lending
JEL: 
G23
L26
R2
R31
Document Type: 
Working Paper

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