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Entrepreneurial Optimism, Credit Availability, and Cost of Financing: Evidence from U.S. Small Businesses

54 Pages Posted: 25 Jul 2009 Last revised: 10 Apr 2017

Na Dai

State University of New York at Albany - School of Business & Center for Institutional Investment Management

Vladimir I. Ivanov

US Securities & Exchange Commission

Rebel A. Cole

College of Business--Florida Atlantic University

Date Written: April 9, 2017

Abstract

Using a large sample of U.S. small businesses and a new measure of optimism, we examine the role of entrepreneurial optimism in small business lending. We provide evidence that optimistic entrepreneurs are not rationed by lenders. Quite the opposite, our results suggest that they often have better credit accessibility and obtain lower cost of financing. Our results are robust to alternative measures of optimism and controls for private information between lenders and borrowers.

Keywords: Optimism, Small Business Financing, Credit Availability, Capital Structure

JEL Classification: G32, M13

Suggested Citation

Dai, Na and Ivanov, Vladimir I. and Cole, Rebel A., Entrepreneurial Optimism, Credit Availability, and Cost of Financing: Evidence from U.S. Small Businesses (April 9, 2017). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1437829 or http://dx.doi.org/10.2139/ssrn.1437829

Na Dai (Contact Author)

State University of New York at Albany - School of Business & Center for Institutional Investment Management ( email )

1400 Washington Ave.
Albany, NY 12222
United States

Vladimir Ivanov

US Securities & Exchange Commission ( email )

Washington, DC
United States
202-551-5307 (Phone)

Rebel A. Cole

College of Business--Florida Atlantic University ( email )

College of Business
777 Glades Road
Boca Raton, FL 33431
United States
1-561-297-4969 (Phone)

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