Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence

T.H.L. Beck, H. Pamuk, R.B. Uras

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Abstract

We use a novel enterprise survey from Tanzania to gauge the relationship between saving instruments and entrepreneurial reinvestment. While most informal savings practices do not imply a lower likelihood of entrepreneurial reinvestment when compared with formal savings practices, we find a significantly negative effect of saving within the household on the likelihood of reinvesting entrepreneurial profits. Our results are robust to an extensive list of robustness checks, including controlling for reverse causation and omitted variable biases. Our work contributes to the recent debate on the implications of different saving instruments in developing countries and expands the entrepreneurial financing constraints literature by focusing on internal rather than external fundings constraints.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Pages1-49
Number of pages49
Volume2014-050
Publication statusPublished - 1 Sep 2014

Publication series

NameCentER Discussion Paper
Volume2014-050

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Keywords

  • Entrepreneurial finance
  • savings
  • reinvestment
  • financial inclusion

Cite this

Beck, T. H. L., Pamuk, H., & Uras, R. B. (2014). Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence. (pp. 1-49). (CentER Discussion Paper; Vol. 2014-050). Tilburg: Economics.