Small-firm credit markets, SBA-guaranteed lending, and economic performance in low-income areas

Ben Craig, William E. Jackson and James Thomson

No 601, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: SBA guaranteed-lending programs are one of many government-sponsored market interventions aimed at promoting small business. The rationale for providing SBA loan guarantees is often based on the argument that they reduce credit rationing in low-income markets for small business loans. In this paper we empirically test whether SBA-guaranteed lending has a greater impact on economic performance in low-income markets. Using local labor market employment rates as our measure of economic> performance, we find evidence consistent with this proposition. In particular, we find a positive and significant correlation between the average annual level of employment in a local market and the level of SBA-guaranteed lending in that local market. And the intensity of this correlation is relatively larger in low-income markets. Indeed, one interpretation of our results is that this correlation is positive and significant only in low-income markets. This result has important implications for public policy in general and SBA-guaranteed lending in particular.

Keywords: small business finance; Small Business Administration; Government-sponsored enterprises (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-200601 Persistent link
https://www.clevelandfed.org/-/media/project/cleve ... -performance-pdf.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:0601

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-200601

Access Statistics for this paper

More papers in Working Papers (Old Series) from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().