cover image: Home Ownership and Home Equity Promote Entrepreneurial Activity

20.500.12592/jhtgcw

Home Ownership and Home Equity Promote Entrepreneurial Activity

3 Mar 2021

Participants in the 4th EBC Network Workshop in Lancaster, the 13th meeting of the Urban Economics Association in New York, the EEA-ESEM meeting in Cologne, the IBEFA in Vancouver, the EMUEA in Düsseldorf, the Spring Meeting of Young Economists (SMYE) in Halle, the Netherlands Economists Day (NED) 2016 and seminar participants at CPB, the Ministry of the Interior and Kingdom Relations, the Minist. [...] The dependent variables are incidence of bank credit, the costs of bank credit and the exit of the sole-proprietor. [...] Based on that value, the actual amount in property tax payable is calculated.9 Moreover, banks also have access to this information and use this valuation to estimate the value of the underlying collateral for a mortgage loan.10 Based on the information on the outstanding mortgage debt of the first residence and the annual valuation of the house, we constructed the LTV ratio of owner-occupier hous. [...] 3.3.2 Relative costs of credit and homeowner status Figure 3 shows the development of the average relative costs of business credit for the 14 groups of entrepreneurs, according to their status on the housing market.13 Relative costs of business credit are the total costs of credit reported on tax returns, weighted by the fraction of bank credit divided by the amount of outstanding bank credit for. [...] The first is the 0− 1 indicator Loan incidence, which was set to ’1’ if the entrepreneur’s bal- ance sheet included bank credit during the year (and ’0’ in all other cases).15 The second dependent variable is the relative cost of the loan, which is defined as the total annual ex- penses for bank credit relative to the total amount of business loans on the entrepreneur’s balance sheet.

Authors

CPB

Pages
49
Published in
Netherlands