More from these Authors

• Working Paper | 2019

  Keeping the Little Guy Down: A Debt Trap for Lending with Limited Pledgeability

  Ernest Liu and Benjamin N. Roth

  Microcredit and other forms of small-scale finance have failed to catalyze entrepreneurship in developing countries. In these credit markets, borrowers and lenders often bargain over not only the division of surplus but also contractual flexibility. We show these lending relationships may lead to endogenous poverty traps for poor borrowers if future income is not pledgeable, yet richer borrowers unambiguously benefit. Improving the bargaining position of rich borrowers can harm poor borrowers, as the lender tightens restrictions and prevents them from growing. The theory rationalizes the low average impact and low demand of microfinance despite its high impact on larger businesses.

  Keywords: Entrepreneurship; Developing Countries and Economies; Microfinance; Problems and Challenges;

  Citation:

  Liu, Ernest, and Benjamin N. Roth. "Keeping the Little Guy Down: A Debt Trap for Lending with Limited Pledgeability." Working Paper, March 2019.  View Details

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• Chapter | The Oxford Handbook of Entrepreneurship and Collaboration | 2019

  Coordination Frictions in Venture Capital Syndicates

  Ramana Nanda and Matthew Rhodes-Kropf

  An extensive literature on venture capital has studied asymmetric information and agency problems between investors and entrepreneurs, examining how separating entrepreneurs from the investor can create frictions that might inhibit the funding of good projects. It has largely abstracted away from the fact that a startup typically does not have just one investor, but several VCs that come together in a syndicate to finance a venture. In this chapter, we therefore argue for an expansion of the standard perspective to also include frictions within VC syndicates. Put differently, what are the frictions that arise from the fact that there is not just one investor for each venture but several investors with different incentives, objectives, and cash flow rights who nevertheless need to collaborate to help make the venture a success? We outline the ways in which these coordination frictions manifest themselves, describe the underlying drivers, and document several contractual solutions used by VCs to mitigate their effects. We believe that this broader perspective provides several promising avenues for future research.

  Keywords: Syndication; frictions; Venture Capital; Networks; Entrepreneurship;

  Citation:

  Nanda, Ramana, and Matthew Rhodes-Kropf. "Coordination Frictions in Venture Capital Syndicates." In The Oxford Handbook of Entrepreneurship and Collaboration, edited by Jeffrey J. Reuer, Sharon Matusik, and Jessica F. Jones. New York: Oxford University Press, 2019.  View Details

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• Article | Annual Review of Economics | 2019

  History, Micro Data, and Endogenous Growth

  Ufuk Akcigit and Tom Nicholas

  The study of economic growth is concerned with long-run changes, and therefore, historical data should be especially influential in informing the development of new theories. In this review, we draw on the recent literature to highlight areas in which study of history has played a particularly prominent role in improving our understanding of growth dynamics. Research at the intersection of historical data, theory, and empirics has the potential to reframe how we think about economic growth in much the same way that historical perspectives helped to shape the first generation of endogenous growth theories.

  Keywords: economic development; Growth; history; innovation; Economic Growth; History; Data and Data Sets; Innovation and Invention;

  Citation:

  Akcigit, Ufuk, and Tom Nicholas. "History, Micro Data, and Endogenous Growth." Annual Review of Economics 11 (2019): 615–633.  View Details

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