Solo Self-Employed Individuals and Bootstrap Financing in the COVID-19 Crisis
29 Pages Posted: 19 May 2020
Date Written: May 12, 2020
Solo self-employed individuals have been gravely affected by the COVID-19 crisis. Many of them have lost substantial revenue and are having serious problems with maintaining liquidity. Using a dataset of 11,662 solo self-employed individuals in Germany, we analyze factors that examine the usage of boot-strap financing measures during the COVID-19 pandemic. Not surprisingly, there is a positive relation-ship between the severity of the crisis and the use of bootstrapping. Our regression analysis shows that the length of the self-employment experience of the individual has a positive effect on bootstrapping, whereas the age of the self-employed individual has a negative effect. Education level, risk attitude, and household size have no effects. We further find that acceptance of government support and bootstrap-ping are positively related. Our study contributes to a better understanding of how solo self-employed individuals deal with liquidity problems in crisis situations. Our findings also contribute to the literature on bootstrap financing. Finally, our study sheds light on the effects of the COVID-19 pandemic on entrepreneurs and aids policymakers in developing targeted policies to help solo self-employed individ-uals overcome crisis-related liquidity problems.
Keywords: Solo self-employed, entrepreneurship, bootstrap finance, COVID-19, crisis
JEL Classification: G30, L26, M13
Suggested Citation: Suggested Citation