Document Type
Working Paper
Publication Date
2014
College/Unit
Chambers College of Business and Economics
Document Number
14-35
Department/Program/Center
Economics
Abstract
Conventional wisdom suggests that small businesses are innovative engines of Schumpetarian growth. However, as small businesses, they are likely to face credit rationing in financial markets. If true then policies that promote lending to small businesses may yield substantial economy-wide returns. We examine the relationship between Small Business Administration (SBA) lending and local economic growth using a spatial econometric framework and a sample of 3,035 U.S. counties for the years 1980 to 2009. We find evidence that a county’s SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 2%.
Digital Commons Citation
Young, Andrew T.; Higgins, Matthew J.; Lacombe, Donald J.; and Sell, Briana, "The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data" (2014). Economics Faculty Working Papers Series. 128.
https://researchrepository.wvu.edu/econ_working-papers/128