Small business lending programs designed to move disadvantaged low-income people into business ownership have been difficult to implement successfully in the US context. Based in part on the premise that financing requirements are an entry barrier limiting the ability of aspiring entrepreneurs...

We evaluate the aggregate effects of expansions of credit supply in environments where subsistence self-employment is prevalent. We extend a standard macro development model to include unemployment risk, which becomes a key driver of selection into self-employment. The model is consistent with...