Michelacci, claudio; Schivardi, Fabiano - Istituto Einaudi per l'Economia e la Finanza (EIEF) - 2008
Financial market imperfections can prevent entrepreneurs from diversifying away the idiosyncratic risk of their business. As a result idiosyncratic risk discourages entrepreneurial activity and hinders growth, with the effects being stronger in economies with lower risk diversification...