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

Dai, Na; Ivanov, Vladimir I.; Cole, Rebel A.

doi:10.2139/ssrn.1437829

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

Journal of Corporate Finance, Forthcoming

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

See all articles by Na Dai

Rebel A. Cole

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: Suggested Citation

Dai, Na and Ivanov, Vladimir 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