Cost of External Finance and Selection into Entrepreneurship

This paper examines the extent to which the positive relationship between personal wealth and entry into entrepreneurship is due to financing constraints. I exploit a tax reform and use unique micro-data from Denmark to study how exogenous changes in the cost of external finance shape both the probability of entering entrepreneurship and the characteristics of those who become entrepreneurs. As expected, differences-in-differences estimates show that the entry rates for individuals who faced an increase in the cost of finance fell by 40% relative to those whose cost of external finance was unchanged. However, while some of the fall in entry was due to less wealthy individuals with high human capital (confirming the presence of financing constraints), the greatest relative decline in entry came from individuals with lower human capital, many of whom were above median wealth. This finding suggests that an important part of the positive relationship between personal wealth and entrepreneurship may be driven by the fact that wealthy individuals with lower ability can start new businesses because they are less likely to face the disciplining effect of external finance.financing constraints, entrepreneurship, entry.

On equivalence of high temperature series expansion and coupling parameter series expansion in thermodynamic perturbation theory of fluids

The coupling parameter series expansion and the high temperature series expansion in the ther- modynamic perturbation theory of fluids are shown to be equivalent if the interaction potential is pairwise additive. As a consequence, for the class of fluids with the potential having a hardcore repulsion, if the hard-sphere fluid is chosen as reference system, the terms of coupling parameter series expansion for radial distribution function, direct correlation function and Helmholtz free energy follow a scaling law with temperature. The scaling law is confirmed by application to square-well fluids.Comment: 13 pages and 3 figures. Preprint submitted to Journal of Chemical Physic

Two procedures to flag radio frequency interference in the UV plane

We present two algorithms to identify and flag radio frequency interference (RFI) in radio interferometric imaging data. The first algorithm utilizes the redundancy of visibilities inside a UV cell in the visibility plane to identify corrupted data, while varying the detection threshold in accordance with the observed reduction in noise with radial UV distance. In the second algorithm, we propose a scheme to detect faint RFI in the visibility time-channel plane of baselines. The efficacy of identifying RFI in the residual visibilities is reduced by the presence of ripples due to inaccurate subtraction of the strongest sources. This can be due to several reasons including primary beam asymmetries and other direction dependent calibration errors. We eliminated these ripples by clipping the corresponding peaks in the associated Fourier plane. RFI was detected in the ripple-free time-channel plane but was flagged in the original visibilities. Application of these two algorithms to 5 different 150 MHz datasets from the GMRT resulted in a reduction in image noise of 20-50% throughout the field along with a reduction in systematics and a corresponding increase in the number of detected sources. However, on comparing the mean flux densities before and after flagging RFI we find a differential change with the fainter sources ($25\sigma <$ S $< 100$ mJy) showing a change of -6% to +1% relative to the stronger sources (S $>$ 100 mJy). We are unable to explain this effect but it could be related to the CLEAN bias known for interferometers.Comment: Accepted for publication in A

Venture Capital Investment in the Clean Energy Sector

We examine the extent to which venture capital is adequately positioned for the rapid commercialization of clean energy technologies in the United States. While there are several startups in clean energy that are well-suited to the traditional venture capital investment model, our analysis highlights a number of structural challenges related to VC investment in the sector that are particularly acute for startups involved in the production of clean energy. One of key bottlenecks threatening innovation in energy production is the inability of VCs to exit their investments at the appropriate time. This hurdle did exist in industries such as biotechnology and communications networking that faced a similar problem when they first emerged, but was ultimately overcome by changes in the innovation ecosystem. However, incumbents in the oil and power sector are different in two respects. First, they are producing a commodity and hence face little end-user pressure to adopt new technologies. Second, they do not tend to feel as threatened by potential competition from clean energy startups, given the market structure and regulatory environment in the energy sector. We highlight that the problem is unlikely to get solved without the active involvement of the government. Even if it does, historical experience suggests it may take several years.

A Darker Side to Decentralized Banks: Market Power and Credit Rationing in SME Lending

We use loan-level data to study how the organizational structure of banks impacts small business lending. We find that decentralized banks ? where branch managers have greater autonomy over lending decisions ? give larger loans to small firms and those with "soft information". However, decentralized banks are also more responsive to their own competitive environment. They are more likely to expand credit when faced with competition but also cherry pick customers and restrict credit when they have market power. This "darker side" to decentralized banks in concentrated markets highlights that the level of local banking competition is key to determining which organizational structure provides better lending terms for small businesses.banking, bank structure, soft information, small business lending