de Meza, David 
ORCID: 0000-0002-5638-8310 and Southey, Clive
(1996)
The borrower's curse: optimism, finance and entrepreneurship.
The Economic Journal, 106 (435).
pp. 375-386.
ISSN 0013-0133
Abstract
This paper argues that most of the facts characterising small-scale businesses, including high failure rates, reliance on bank credit rather than equity finance, relatively low interest rate margins, and credit rationing, can be explained by a tendency for those who are excessively optimistic to dominate new entrants. Drawing on findings in psychology, we model entrants as relatively naïve optimisers. Banks on the other hand are viewed as well informed and efficient processors of information.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.blackwellpublishing.com/journal.asp?ref... |
| Additional Information: | © 1996 Royal Economic Society |
| Divisions: | Management |
| Subjects: | H Social Sciences > HB Economic Theory |
| Date Deposited: | 09 May 2011 13:16 |
| Last Modified: | 18 Nov 2024 00:42 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35835 |
Actions (login required)
 |
View Item |
