Title: The dark side of Entrepreneurial Finance: What has changed with COVID?

Biography:

Dr. Arvind Ashta is professor of Finance. He is a member of research associations (RRI, CERMi, PRME Anti-poverty Working Group, among others) and has been associated with the European Microfinance Platform. He has over eighty publications in international journals. He has edited "Advanced Technologies for Microfinance", co-edited "MIS in Microfinance" and "Slow Management" and authored "Microfinance: Battling a Wicked Problem" and “A Realistic Theory of Social Entrepreneurship: A Life Cycle Analysis of Micro-Finance”. He is a member of a club of micro-investors. The essential of his research interests hovers around microfinance, social entrepreneurship and fintech.

Abstract

The call for papers of a special issue in Entreprendre & Innover on the dark side of Entrepreneurial Finance, in the first half of 2019, indicated that financiers were gaining too much importance and exerting too much control over entrepreneurs.  The call talked about the unintended consequences, where Finance eventually kills the entrepreneurial spirit instead of creating it and nourishing it. There is extensive literature in microfinance devoted to the harmful financing of microentrepreneurs (Bateman, 2010, Sinclair, 2012). Our interview with Nobel Laureate Muhamad Yunus showed that he focused on the difficulties of financing social businesses (Toutain and Ashta, 2021 forthcoming). He considers that dividends should not be paid and that this internal financing would allow the social business to grow faster, in a healthy way. An obsession with growth, of course, can have dark consequences. 2021 has been marked by a problem of supply chain finance being used to finance growth, as demonstrated by the Greensill Capital bankruptcy (Ashta, 2021 forthcoming-b). Ultimately using short-term finance for long-term needs can result in dire consequences for both the financer and the entrepreneur. My interview with Gilda E. Darlas showed that she was focusing on the dark side of greed which makes people evil, and she wanted to focus on the right kind of education which could make people more altruistic (Ashta, 2021 forthcoming-a). She hopes this would reduce concentrations of wealth by financial institutions. Covid has led to major changes such as increased poverty levels, a decoupling of the financial economy from the real economy, and the growth of zombie firms. There is little certainty on where we will go next: what part of the old economy will be revived, and what part of the new will be retained? This poses major challenges for entrepreneurship at the country level, firm level, and individual level. The talk will reflect on the need for originality in policies, strategies and research.