Government guaranteed small business loans and regional growth

Yong Suk Lee

Journal of Business Venturing, 2018, vol. 33, issue 1, 70-83

Abstract: This paper examines the impact of government guaranteed small business loans on regional growth. I construct a metro-level panel of the Small Business Administration's guaranteed loans and examine economic growth between 1993 and 2002, across 316 metro areas in the US. A simple OLS regression finds a significant positive relationship between small business loans and regional growth. However, first-difference and instrumental variable regressions that mitigate endogeneity find no significant employment or income growth effects from small business loans. At least from an efficiency perspective, there seems to be no net gains to the regional economy from guaranteed small business loans.

Keywords: Small business loans; Guaranteed loans; Entrepreneurship; Regional growth (search for similar items in EconPapers)
JEL-codes: G18 K35 L26 O18 R11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:33:y:2018:i:1:p:70-83

DOI: 10.1016/j.jbusvent.2017.11.001

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