Solo Self-Employed Individuals and Bootstrap Financing in the COVID-19 Crisis

29 Pages Posted: 19 May 2020

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Christian Fisch

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Department of Applied Economics; Erasmus Research Institute of Management (ERIM)

Mirko Hirschmann

University of Trier - Faculty of Management

Date Written: May 12, 2020

Abstract

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

Block, Jorn Hendrich and Fisch, Christian and Hirschmann, Mirko, Solo Self-Employed Individuals and Bootstrap Financing in the COVID-19 Crisis (May 12, 2020). Available at SSRN: https://ssrn.com/abstract=3598818

Jorn Hendrich Block

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Christian Fisch

University of Trier - Faculty of Management ( email )

Universit├Ątring 15
Trier, 54296
Germany
0049 651 2013033 (Phone)

HOME PAGE: http://www.unternehmensfuehrung.uni-trier.de

Erasmus University Rotterdam (EUR) - Department of Applied Economics ( email )

Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Mirko Hirschmann (Contact Author)

University of Trier - Faculty of Management ( email )

Universit├Ątsring 15
Trier, Rhineland-Palatinate 54296
Germany

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