Evaluation of State Lender Commitment Programs

Gordon S. Hanson
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Gordon S. Hanson: University of Illinois at Chicago

Economic Development Quarterly, 1993, vol. 7, issue 3, 255-266

Abstract: States have been adopting a variety of economic intervention strategies intended to stimulate growth in the small business sector. This study uses an interrupted time-series analysis to test the hypothesis that growth in the small business establishment sector of a state's economy can be stimulated and sustained when lender commitment programs are in effect. These state-initiated loan packages are designed to extend the availability of capital to potential employment-generating enterprises by diffusing the risk among lenders and having the state assume a share of it. The findings provide only mixed support for this hypothesis. There is evidence that the programs do raise the level of economic activity in the short run, but a diminished rate of growth in small business establishments over time is also observed.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecdequ:v:7:y:1993:i:3:p:255-266

DOI: 10.1177/089124249300700304

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