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Finance and Growth at the Firm Level: Evidence from SBA Loans

55 Pages Posted: 9 Aug 2015 Last revised: 1 Sep 2016

J. David Brown

US Census Bureau Center for Economic Studies; IZA Institute of Labor Economics

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

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Date Written: July 1, 2016

Abstract

We analyze linked databases on all SBA loans and lenders and on all U.S. employers to estimate the effects of financial access on employment growth. Estimation exploits the long panels and variation in ease of access to SBA lenders. The results imply an increase of 3 to 3.5 jobs for each million dollars of loans, suggesting real effects of credit constraints. Estimated impacts are stronger for younger and larger firms and when local credit conditions are weak, but we find no clear evidence of cyclical variation. We estimate taxpayer costs per job created in the range of $21,000 to $25,000.

Keywords: finance, growth, financial access, employment, Small Business Administration, 7(a), loans

JEL Classification: D04, G21, G28, H32, H81, J23, L53

Suggested Citation

Brown, J. David and Earle, John S., Finance and Growth at the Firm Level: Evidence from SBA Loans (July 1, 2016). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2641184 or http://dx.doi.org/10.2139/ssrn.2641184

J. David Brown

US Census Bureau Center for Economic Studies ( email )

4600 Silver Hill Road
Washington, DC 20233
United States
301-763-8769 (Phone)
301-763-5935 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

John S. Earle (Contact Author)

George Mason University - Schar School of Policy and Government ( email )

3351 Fairfax Drive
MS 3B1
Arlington, VA 22201
United States
703-993-8023 (Phone)

HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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