Why Small Businesses Were Hit Harder by the Recent Recession

Although both large and small businesses felt the sting of job losses during the 2007-09 downturn, small firms experienced disproportionate declines. A study of the recession’s employment effect on small firms suggests that poor sales and economic uncertainty were the main reasons for their weak performance and sluggish recovery - problems that affected large firms too, but to a lesser degree. Although a tightened credit supply constrained some small firms, weak consumer demand for the firms’ products and services was a more pressing factor, reducing revenues and dampening new investment spending.

Keywords: Small businesses, Great recession of 2007, Employment

JEL Classification: E24,J21

Suggested Citation: Suggested Citation

Sahin, Aysegul and Kitao, Sagiri and Cororaton, Anna and Laiu, Sergiu, Why Small Businesses Were Hit Harder by the Recent Recession (July 1, 2011). Current Issues in Economics and Finance, Vol. 17, No. 4, July 2011, Available at SSRN: https://ssrn.com/abstract=1895527 or http://dx.doi.org/10.2139/ssrn.1895527