search query: @author Southey, C. / total: 3
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| Author: | De Meza, D. Southey, C. |
| Title: | The borrower's curse: optimism, finance and entrepreneurship |
| Journal: | Economic Journal
1996 : MAR, VOL. 106-435, p. 375-386 |
| Index terms: | ECONOMICS OPTIMIZATION FINANCE |
| Language: | eng |
| Abstract: | This paper argues that most of the facts characterising small-scale businesses, including high failure rates, reliance on bank credit rather than equity finance, relatively low interest rate margins, and credit rationing, can be explained by a tendency for those who are excessively optimistic to dominate new entrants. Drawing on findings in psychology, the authors model entrants as relatively naive optimisers. Banks on the other hand are viewed as well informed and efficient processors of information. |
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