Financing constraints and entrepreneurship

by William R. Kerr

Surveys of current and potential entrepreneurs suggest that obtaining adequate access to capital is one of the biggest hurdles to starting and growing a new business. Given the important role that entrepreneurship is believed to play in the process of creative destruction – and hence economic growth – it is not surprising that attempts to alleviate financing constraints for would-be entrepreneurs is an important goal for policy makers across the world. This article reviews two major streams of work examining the relevance of financing constraints for entrepreneurship. The first research...