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Entrepreneurship in post-conflict transition : the role of informality and access to finance

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Author Info
Demirguc-Kunt, Asli
Klapper, Leora F.
Panos, Georgios A.

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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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4935.

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Date of creation: 01 May 2009
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Handle: RePEc:wbk:wbrwps:4935

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

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Pouliakas, Konstantinos & Panos, Georgios & Zangelidis, Alexandros, 2009. "The Inter-Related Dynamics of Dual Job Holding, Human Capital and Occupational Choice," MPRA Paper 16859, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-13.

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