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Small Business vulnerability to floods and the effects of disaster loans

Meri Davlasheridze () and Pinar C. Geylani
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Meri Davlasheridze: Texas A&M University
Pinar C. Geylani: Duquesne University

Small Business Economics, 2017, vol. 49, issue 4, No 9, 865-888

Abstract: Abstract In this paper, we examine the impacts of floods on businesses and the efficacy of small business administration (SBA) disaster loans on mitigating disaster aftereffects. We find lack of business adaptation to extreme events in the short term, indicating their extreme vulnerability to flood disasters. Our results further indicate that subsidized disaster loans are important for businesses, with statistically significant effects estimated for businesses employing fewer than 50 people. At the margin, for every additional dollar spent on disaster loans per establishment in a county, four small businesses survive. Gloomy projections about increasing frequency and severity of disasters imply there will be significant loss in local economic activities because of increased vulnerability of small businesses to these incidents. Moreover, these effects will have implications nationwide, given the vital role small businesses play in creating jobs.

Keywords: Small business disaster loans; SBA; Flood disasters; Business establishment (search for similar items in EconPapers)
JEL-codes: Q54 Q58 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s11187-017-9859-5

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Handle: RePEc:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9859-5