Entrepreneurship in Post-Conflict Transition : The Role of Informality and Access to Finance

38 Pages Posted: 20 Apr 2016

See all articles by Asli Demirgüç-Kunt

Asli Demirgüç-Kunt

World Bank

Leora F. Klapper

World Bank; World Bank - Development Research Group (DECRG)

Georgios A. Panos

University of Glasgow - Adam Smith Business School

Date Written: May 1, 2009

Abstract

The authors examine the factors affecting the transition to self-employment in Bosnia and Herzegovina, using the World Bank Living Standard Measurement Survey panel household survey for the years 2001-2004. In the beginning of the sample, the country changed its legal framework, with the primary aim to promote labor market flexibility and to encourage entrepreneurial activity. The analysis identifies individuals that switched to self-employment (employers and own account) during the sample period and the viability of this transition, in terms of business survival for more than one year. The results suggest an important role for financing constraints. Specifically, wealthier households are more likely to become entrepreneurs and survive in self-employment. After controlling for household wealth, having an existing bank relationship increases the likelihood of starting a business with hired employees and increases the chances of survival for the new entrepreneur. By contrast, overseas - and in some cases domestic - remittances decrease the likelihood of becoming an entrepreneur.

Keywords: Access to Finance, Labor Markets, Banks & Banking Reform, Labor Policies

Suggested Citation

Demirgüç-Kunt, Asli and Klapper, Leora F. and Panos, Georgios A., Entrepreneurship in Post-Conflict Transition : The Role of Informality and Access to Finance (May 1, 2009). World Bank Policy Research Working Paper No. 4935, Available at SSRN: https://ssrn.com/abstract=1407953

Asli Demirgüç-Kunt (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Leora F. Klapper

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-8738 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/lklapper

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Georgios A. Panos

University of Glasgow - Adam Smith Business School ( email )

Gilbert Scott Building
University Avenue
Glasgow, Scotland G128QQ
United Kingdom

HOME PAGE: http://https://sites.google.com/site/georgiosapanos/

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