Entrepreneurial saving practices and reinvestment: Theory and evidence

T.H.L. Beck, Haki Pamuk, Burak Uras

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We use a novel enterprise survey to gauge the relationship between saving instruments and entrepreneurial reinvestment. We show that while most informal saving practices are not associated with a lower likelihood of reinvestment when compared with formal saving practices, there is a significantly lower association of saving within the household with the likelihood of reinvesting profits than other savings form, most importantly, formal saving forms. This result is robust to the model specification and controlling for a large array of variables including district-level fixed effects. We also provide empirical tests to address reverse causation and omitted variable concerns. Our work contributes to the 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 funding constraints.
Original languageEnglish
Pages (from-to)1205-1228
JournalReview of Development Economics
Volume21
Issue number4
DOIs
Publication statusPublished - Nov 2017

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Cite this

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Entrepreneurial saving practices and reinvestment : Theory and evidence. / Beck, T.H.L.; Pamuk, Haki; Uras, Burak.

In: Review of Development Economics, Vol. 21, No. 4, 11.2017, p. 1205-1228.

Research output: Contribution to journalArticleScientificpeer-review

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