Abstract

http://ssrn.com/abstract=2417676
 


 



The Impact of Student Loan Debt on Small Business Formation


Brent W. Ambrose


Pennsylvania State University

Larry Cordell


Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Shuwei Ma


Federal Reserve Bank of Philadelphia

July 15, 2015


Abstract:     
This study examines the impact of growth in student debt on net small business formation. We find a significant and economically meaningful negative correlation between changes in student debt and net new businesses employing one to four employees, the firms most dependent on personal debt for financing. Based on our model, an increase of one standard deviation in student debt reduced the number of businesses with one to four employees by 14% between 2000 and 2010. The effect on larger firms decreased with firm size, which we interpret to mean that these firms had greater access to outside capital.

Number of Pages in PDF File: 37

Keywords: Student Loans, Small Business, Debt

JEL Classification: D12, I22, I25, I28, H31, R2


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Date posted: March 31, 2014 ; Last revised: July 21, 2015

Suggested Citation

Ambrose, Brent W. and Cordell, Larry and Ma, Shuwei, The Impact of Student Loan Debt on Small Business Formation (July 15, 2015). Available at SSRN: http://ssrn.com/abstract=2417676 or http://dx.doi.org/10.2139/ssrn.2417676

Contact Information

Brent W. Ambrose (Contact Author)
Pennsylvania State University ( email )
University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)
Larry Cordell
Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )
Ten Independence Mall
Philadelphia, PA 19106-1574
United States
Shuwei Ma
Federal Reserve Bank of Philadelphia ( email )
Ten Independence Mall
Philadelphia, PA 19106-1574
United States
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