Identification of loan effects on personal finance: A case for small U.S. entrepreneurs

Mohammadmahdi Banasaz, Niloy Bose and Nazanin Sedaghatkish

Journal of Economic Behavior & Organization, 2025, vol. 234, issue C

Abstract: This paper draws information from a micro-lender and a credit bureau to identify causal effects of small loans on financial health of small U.S. business owners. To achieve this, we exploit temporal variations in the loan disbursements and use an estimation strategy that controls for potential biases due to treatment effect heterogeneity. The results suggest that even small loans are effective in generating lasting positive impacts on accepted financial health indicators, such as Vantage Score (Credit Score), Debt-to-Income Ratio, and Credit Utilization Ratio. We obtain similar robust results for subprime and startup borrowers, who are known to face difficulties securing credit.

Keywords: Small U.S. entrepreneurs; Identification of loan effects; Financial health; Dynamic treatment effects; Treatment effect heterogeneity (search for similar items in EconPapers)
JEL-codes: C22 D14 G21 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268125001027
Full text for ScienceDirect subscribers only

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:eee:jeborg:v:234:y:2025:i:c:s0167268125001027

DOI: 10.1016/j.jebo.2025.106982

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().