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The Determinants of Informal Capital in the Financing of Small Firms at Start-Up:: An Ethnic Comparison of Small Firms in Sweden
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
Mid Sweden University, Faculty of Human Sciences, Department of Tourism Studies and Geography.
2013 (English)In: International Journal of Economics and Finance, ISSN 1916-971X, Vol. 5, no 3, 62-72 p.Article in journal, Meeting abstract (Refereed) Published
Abstract [en]

This study explains empirically the differences in the use of informal financing between native- and immigrant-owned small businesses in terms of ethnicity and other relevant variables. A sample of 2814 native- and immigrant-owned small businesses, consisting of a unique database gathered, was analysed and several univariate and multivariate methods employed. The results suggest that ethnicity is a significant explanatory variable and an important factor in informal capital access in the start-up stage in terms of loans from family members and friends. Moreover, the other independent variables, namely gender, age, experience of starting businesses, the amount of start capital, and firm size, affect loans from family members, whereas loans from friends are influenced by age, size, and industry affiliation. Since knowledge about informal capital determinants is limited, the results of this study add to our understanding of the variables that explain the financing behaviour of small businesses at start-up.

Place, publisher, year, edition, pages
Toronto- Canada: Canadian Center of Science and Education , 2013. Vol. 5, no 3, 62-72 p.
Keyword [en]
small business finance, ethnicity, informal capital sources, start-up stage, bank loan
National Category
Social Sciences Economics and Business Social and Economic Geography
URN: urn:nbn:se:miun:diva-18514DOI: 10.5539/ijef.v5n3p62OAI: diva2:607150
Available from: 2013-02-22 Created: 2013-02-22 Last updated: 2013-09-17Bibliographically approved

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Yazdanfar, DarushAbbasian, Saeid
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Department of Business, Economics and LawDepartment of Tourism Studies and Geography
Social SciencesEconomics and BusinessSocial and Economic Geography

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