SANJAY BANERJI Sanjay.Banerji@nottingham.ac.uk
Professor of Finance
Monitoring costs, credit constraints and entrepreneurship
Banerji, Sanjay; Raj, Rajesh S.N.; Sen, Kunal
Authors
Rajesh S.N. Raj
Kunal Sen
Abstract
Access to finance is seen as a binding constraint on the growth of household enterprises in developing countries. We develop a principal-agent model of a household enterprise and show that limited access to finance and monitoring costs constrain the firm size via both a direct and indirect effect. While greater access to finance has a positive direct effect on the hiring of paid labour, firms may not choose to expand and use paid labour, via an indirect route which operates through the monitoring costs of employing paid workers. We use large nationally representative surveys of household enterprises in Indian manufacturing and find support for the predictions of our theory.
Citation
Banerji, S., Raj, R. S., & Sen, K. (2016). Monitoring costs, credit constraints and entrepreneurship. Manchester School, 84(5), https://doi.org/10.1111/manc.12122
Journal Article Type | Article |
---|---|
Acceptance Date | Jun 26, 2015 |
Online Publication Date | Jul 27, 2015 |
Publication Date | Sep 1, 2016 |
Deposit Date | Nov 30, 2016 |
Publicly Available Date | Nov 30, 2016 |
Journal | Manchester School |
Print ISSN | 1463-6786 |
Electronic ISSN | 1467-9957 |
Publisher | Wiley |
Peer Reviewed | Peer Reviewed |
Volume | 84 |
Issue | 5 |
DOI | https://doi.org/10.1111/manc.12122 |
Keywords | entrepreneurship, monitoring costs, credit constraint, household enterprises, India. |
Public URL | https://nottingham-repository.worktribe.com/output/974967 |
Publisher URL | http://onlinelibrary.wiley.com/doi/10.1111/manc.12122/abstract |
Contract Date | Nov 30, 2016 |
Files
Familiy Firm Paper_Final.pdf
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