Credit Cards, Race and Entrepreneurship
41 Pages Posted: 23 Oct 2010 Last revised: 29 Oct 2014
Date Written: September 6, 2011
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.
Keywords: Financial Constraints, Entrepreneurship, Barriers to Entry, Race
JEL Classification: J15, L26, M13
Suggested Citation: Suggested Citation