| Abstract | This paper evaluates the impact of credit constraints on the creation of family business by utilizing 2011 CHFS (China Household Finance and Survey) micro-data. Firstly, we argue that the credit constrains of a family when applying mortgages, car loans, and credit cards, are positively related with the constraints of families’ business activity. Then we redefine the constraints when households entry entrepreneurship, and use LPM model and duration model to estimate the impact of credit constraints on the possibilities of family entrepreneurship. The result has shown that credit constraints will significantly decrease the possibility of a family entrepreneurship by around 2.2%. In addition, we find out the constraints of families’ housing loan and cars consumption loan before starting businesses, and eliminate the reverse effect of constraints with the decision to become an entrepreneur. Furthermore, we use PSM (propensity score matching) method to compare the differences of entrepreneurial vitality between the constrained and unconstrained families with similar backgrounds. It is also displayed that borrowing constraints significantly lead to the probability loss by 2%. The risk appetite attitudes of household heads can hardly increase the entrepreneurial activity when families are under credit constraints; on the contrary, initial wealth turns to be statistically important, households are more capable of starting business after obtaining relocation subsidies. |