Abstract
Entrepreneurship is a vital engine for economic growth and development. The success of small enterprises and startups is an important agenda given that the failure rate tends to be high.
Failure is often caused by lack of reliable sources of financing, which most entrepreneurs cannot obtain from formal sources such as commercial banks or crowdfunds. In this paper, we analyze the role of microcredit as an important alternative source of business startup financing.
In contrast to the mainstream literature, we analyze the role of both formal and informal sources of financing. Empirical findings are based on a unique household dataset compiled from a household survey of entrepreneurs and non-entrepreneurs in Uzbekistan.
The findings indicate that startup capital, gender, education, and household size constitute the determinants of business success. However, these factors differ slightly depending on whether entrepreneurs can borrow from microfinance institutions or not.