Court-ship, kinship and business: A study on the interaction between the formal and the informal institutions and its effect on entrepreneurship
In this paper we theoretically and empirically examine how the interaction between the formal court system and the informal loan network affects a household's decision to start a business. We find that when the formal court system is weak, expansion of informal credit network leads to the proliferation of business. However, with a sufficiently strong court system, expansion of the credit network has a negative effect on business prospects. This result is explained by the contradictions between formal laws and norms used by informal networks.
Year of publication: |
2015
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Authors: | Chakraborty, Tanika ; Mukherjee, Anirban ; Saha, Sarani |
Published in: |
IZA Journal of Labor & Development. - Heidelberg : Springer, ISSN 2193-9020. - Vol. 4.2015, 7, p. 1-21
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Publisher: |
Heidelberg : Springer |
Subject: | Informal network | Court | Formal institution | Entrepreneurship |
Saved in:
freely available
Type of publication: | Article |
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Type of publication (narrower categories): | Article |
Language: | English |
Other identifiers: | 10.1186/s40175-015-0027-5 [DOI] 847849031 [GVK] hdl:10419/152403 [Handle] |
Classification: | K12 - Contract Law ; L26 - Entrepreneurship ; O17 - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements |
Source: |
Persistent link: https://www.econbiz.de/10011603720