Funding Self-Employment: The Role of Consumer Credit
27 Pages Posted: 7 Jan 2012
Date Written: December 1, 2011
Abstract
This paper investigates whether self-employed households use consumer loans - in particular installment loans and overdrafts - to finance business activities. Controlling for financial and non-financial household variables we show that self-employed households particularly use personal overdrafts significantly more often than employee households. When analyzing the correlation between consumer loan takeups and consumption of self-employed in comparison to employee households, we find first evidence that overdrafts are used by self-employed to finance their business as well. This indicates that intermingling constitutes a financing strategy when regular business loans might not be accessible.
Keywords: Small Business Finance, Consumer Credit, Financial Intermingling
JEL Classification: G32, D12, D14
Suggested Citation: Suggested Citation