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Credit Cards, Race and Entrepreneurship

41 Pages Posted: 23 Oct 2010 Last revised: 29 Oct 2014

Aaron Chatterji

Duke University - Fuqua School of Business

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: September 6, 2011

Abstract

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

Chatterji, Aaron and Seamans, Robert, Credit Cards, Race and Entrepreneurship (September 6, 2011). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1696036 or http://dx.doi.org/10.2139/ssrn.1696036

Aaron Chatterji

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Robert Seamans (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

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