Monitoring costs, credit constraints and entrepreneurship
Access to finance is seen as a binding constraint on the growth of household enterprises in developing countries. We develop a principal-agent model of a household enterprise and show that limited access to finance and monitoring costs constrain the firm size via both a direct and indirect effect....
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| Format: | Article |
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Wiley
2016
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| Online Access: | https://eprints.nottingham.ac.uk/39087/ |
| _version_ | 1848795760472096768 |
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| author | Banerji, Sanjay Raj, Rajesh S.N. Sen, Kunal |
| author_facet | Banerji, Sanjay Raj, Rajesh S.N. Sen, Kunal |
| author_sort | Banerji, Sanjay |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Access to finance is seen as a binding constraint on the growth of household enterprises in developing countries. We develop a principal-agent model of a household enterprise and show that limited access to finance and monitoring costs constrain the firm size via both a direct and indirect effect. While greater access to finance has a positive direct effect on the hiring of paid labour, firms may not choose to expand and use paid labour, via an indirect route which operates through the monitoring costs of employing paid workers. We use large nationally representative surveys of household enterprises in Indian manufacturing and find support for the predictions of our theory. |
| first_indexed | 2025-11-14T19:37:12Z |
| format | Article |
| id | nottingham-39087 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:37:12Z |
| publishDate | 2016 |
| publisher | Wiley |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-390872020-05-04T20:01:00Z https://eprints.nottingham.ac.uk/39087/ Monitoring costs, credit constraints and entrepreneurship Banerji, Sanjay Raj, Rajesh S.N. Sen, Kunal Access to finance is seen as a binding constraint on the growth of household enterprises in developing countries. We develop a principal-agent model of a household enterprise and show that limited access to finance and monitoring costs constrain the firm size via both a direct and indirect effect. While greater access to finance has a positive direct effect on the hiring of paid labour, firms may not choose to expand and use paid labour, via an indirect route which operates through the monitoring costs of employing paid workers. We use large nationally representative surveys of household enterprises in Indian manufacturing and find support for the predictions of our theory. Wiley 2016-09 Article PeerReviewed Banerji, Sanjay, Raj, Rajesh S.N. and Sen, Kunal (2016) Monitoring costs, credit constraints and entrepreneurship. Manchester School, 84 (5). pp. 573-599. ISSN 1467-9957 entrepreneurship monitoring costs credit constraint household enterprises India. http://onlinelibrary.wiley.com/doi/10.1111/manc.12122/abstract doi:10.1111/manc.12122 doi:10.1111/manc.12122 |
| spellingShingle | entrepreneurship monitoring costs credit constraint household enterprises India. Banerji, Sanjay Raj, Rajesh S.N. Sen, Kunal Monitoring costs, credit constraints and entrepreneurship |
| title | Monitoring costs, credit constraints and entrepreneurship |
| title_full | Monitoring costs, credit constraints and entrepreneurship |
| title_fullStr | Monitoring costs, credit constraints and entrepreneurship |
| title_full_unstemmed | Monitoring costs, credit constraints and entrepreneurship |
| title_short | Monitoring costs, credit constraints and entrepreneurship |
| title_sort | monitoring costs, credit constraints and entrepreneurship |
| topic | entrepreneurship monitoring costs credit constraint household enterprises India. |
| url | https://eprints.nottingham.ac.uk/39087/ https://eprints.nottingham.ac.uk/39087/ https://eprints.nottingham.ac.uk/39087/ |