(Un)Expected Housing Price Changes: Identifying the Drivers of Small Business Finance

28 Pages Posted: 1 Feb 2016

See all articles by Pavel S. Kapinos

Pavel S. Kapinos

Federal Reserve Bank of Dallas--Financial Industry Studies

Tami Gurley-Calvez

University of Kansas Medical Center

Kandice A. Kapinos

RAND Corporation

Date Written: January 27, 2016

Abstract

In this paper, we use the Kauffman Firm Survey to examine the effect of housing price changes on small business financial variables. We apply macroeconomic forecasting techniques to decompose housing price changes into expected and unexpected components. In addition to investigating the effect of predictable and unpredictable movements in housing prices, we argue that our use of forecast errors allows us to identify plausibly exogenous variation in housing prices. We show that for several measures of small business financing, the unexpected housing price changes have particularly large effects on small business balance sheets. Analysis of specific measures of credit access points to the channels of transmission of housing market disruptions on small business outcomes and suggests that small business owners absorb negative shocks to housing wealth through relatively expensive sources of credit and not through loans from the banking sector. We conclude with policy proposals for reducing the effect of housing market disruptions on small businesses.

Keywords: Small business finance, house price changes, forecasting

JEL Classification: D14, G17

Suggested Citation

Kapinos, Pavel S. and Gurley-Calvez, Tami and Kapinos, Kandice A., (Un)Expected Housing Price Changes: Identifying the Drivers of Small Business Finance (January 27, 2016). Available at SSRN: https://ssrn.com/abstract=2725265 or http://dx.doi.org/10.2139/ssrn.2725265

Pavel S. Kapinos (Contact Author)

Federal Reserve Bank of Dallas--Financial Industry Studies ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

HOME PAGE: http://https://sites.google.com/site/pavelkapinos/

Tami Gurley-Calvez

University of Kansas Medical Center ( email )

1415
Jayhawk Blvd.
Lawrence, KS 66045
United States

Kandice A. Kapinos

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
41
Abstract Views
791
PlumX Metrics