Abstract

In light of the current economic crisis, banks and other financial institutions have become more and more reluctant to provide financial capital for new ventures. Therefore the importance of informal investors for entrepreneurial activity and new business venturing has increased. Several studies extensively describe and analyze the characteristics and behavior of informal investors. Light has been shed on the factors determining the propensity of individuals to make informal investments in businesses owned by others. However, less research focuses on investment volumes of these informal investors. This paper aims to fill this gap by jointly investigating the determinants of both the prevalence and the investment volumes of informal investors.

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