Credit Cards, Race and Entrepreneurship
Duke University - Fuqua School of Business
New York University (NYU) - Leonard N. Stern School of Business
September 6, 2011
Journal of Financial Economics (JFE), Forthcoming
This paper examines the impact of financial deregulation on entrepreneurship. We assess the impact of credit card deregulation on transitions into self-employment using state-level removal of credit card interest rate ceilings following the US Supreme Court’s 1978 Marquette decision as a quasi-natural experiment. We find that credit card deregulation increases the probability of entrepreneurial entry, with a particularly strong effect for black entrepreneurs. We demonstrate that these effects are magnified in states with a history of racial discrimination and link the results to discrimination-based barriers to entry.
Number of Pages in PDF File: 41
Keywords: Financial Constraints, Entrepreneurship, Barriers to Entry, Race
JEL Classification: J15, L26, M13Accepted Paper Series
Date posted: October 23, 2010 ; Last revised: March 26, 2012
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