Wealth accumulation and capital investment dynamics of entrepreneurs

Entrepreneurs play a significant role in advanced economies. As central banks raise interest rates to curb inflation, it is important to understand the unintended consequences that rising rates have on entrepreneur investment. On one hand, rising rates could hurt entrepreneur investment by restricting access to credit. On the other hand, higher rates increase the return on savings, incentivizing households to accumulate more wealth. As entrepreneurs tend to rely on personal wealth to finance investment in their firm, an increase in interest rates and the following increase in wealth could result in more capital investment by entrepreneurs. Data on entrepreneur wealth and capital investment is needed to observe the strength of these opposing effects, to investigate whether there is a significant relationship between wealth and investment and to determine the overall impact of monetary policy on entrepreneur investment that is crucial to the economy.