Examining the Impact of Credit Access on Small Firm Survivability

39 Pages Posted: 9 Nov 2011

See all articles by Traci Mach

Traci Mach

Board of Governors of the Federal Reserve System

John D. Wolken

Board of Governors of the Federal Reserve System - Financial Structure Section

Multiple version iconThere are 2 versions of this paper

Date Written: August 9, 2011

Abstract

This paper examines the effects of credit availability on small firm survivability over the period 2004 to 2008 for non-publicly traded small enterprises. Using data from the 2003 Survey of Small Business Finances, we develop failure prediction models for a sample of small firms that were confirmed to have been in business as of December 2003, with particular attention to the impact of credit constraints. We find that credit constrained firms were significantly more likely to go out of business than non constrained firms. Moreover, credit constraint and credit access variables appear to be among the most important factors predicting which small U.S. firms went out of business during the 2004-2008 period even though an extensive set of firm, owner, and market characteristics were also included as explanatory factors.

Keywords: Small business survivability, small business credit access, Survey of Small Business Finances

JEL Classification: G3

Suggested Citation

Mach, Traci and Wolken, John D., Examining the Impact of Credit Access on Small Firm Survivability (August 9, 2011). FEDS Working Paper No. 2011-35. Available at SSRN: https://ssrn.com/abstract=1956696 or http://dx.doi.org/10.2139/ssrn.1956696

Traci Mach (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

John D. Wolken

Board of Governors of the Federal Reserve System - Financial Structure Section ( email )

20th and C Streets, NW
Washington, DC 20551
202-452-2503 (Phone)

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