Small Firm Credit Market Discrimination, Small Business Administration Guaranteed Lending, and Local Market Economic Performance

Bibliographic Data

ID9776995
AuthorsBen R Craig (0000-0003-0667-1422, Federal Reserve Bank of Cleveland, corresponding author), William E Jackson (0000-0002-1360-4722, University of Alabama), James B Thomson (0000-0002-9055-9611, Federal Reserve Bank of Cleveland)
Year2007
Volume613
Issue1
Pages73-94
Publication date2007-09-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Annals of the American Academy of Political and Social Science (JOURNAL)
Journal identifiersISSN: 0002-7162 • E-ISSN: 1552-3349
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/0002716207303579
OpenAlexW2144937594
LanguageEN
Citations received2
References cited22

In this article, the authors empirically test whether Small Business Administration (SBA) guaranteed lending has a greater impact on economic performance in markets with a high percentage of potential minority small businesses. This hypothesis is based on the assumptions that (1) credit rationing is more likely to occur in markets with a higher percentage of minority small businesses; and (2) SBA guaranteed lending is likely to reduce these credit rationing problems, thus improving economic performance in the local market. Using local market employment rates as the measure of economic performance, the authors find evidence consistent with this proposition. Specifically, the authors find a positive and significant impact of SBA guaranteed lending on the average employment rate in a local market. And, this impact is 200 percent larger in markets with a high percentage of potential minority small businesses. This result has important implications for public policy in general and SBA guaranteed lending in particular

Bond market · Business · Credit rationing · Economic growth · Economics · Interest rate · Monetary economics · Rationing · Small business · Banking stability, regulation, efficiency · Corporate Finance and Governance · Finance · Housing Market and Economics

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