IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v28y2019icp82-86.html
   My bibliography  Save this article

Missing the cut? How threshold effects distort U.S. small business lending trends

Author

Listed:
  • Heil, Mark

Abstract

This paper estimates a downward bias over time in official U.S. lending data series widely used to proxy credit flows to small businesses. The bias occurs because the upper loan origination size threshold used to proxy this lending is fixed and denominated in nominal currency, so its real value erodes over time due to inflation. Some advocates invoke the apparent declining small business lending trend to push governments to implement support programs for these businesses. The paper offers preliminary fully inflation-adjusted multipliers applicable to nominal lending data so that analysts may observe more accurate trends and better inform policy decisions.

Suggested Citation

  • Heil, Mark, 2019. "Missing the cut? How threshold effects distort U.S. small business lending trends," Finance Research Letters, Elsevier, vol. 28(C), pages 82-86.
    • Handle: RePEc:eee:finlet:v:28:y:2019:i:c:p:82-86
    DOI: 10.1016/j.frl.2018.04.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612318300345
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2018.04.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Scott Shane & Ann Marie Wiersch, 2013. "Why small business lending isn’t what it used to be," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    2. Courtney M. Carter & Traci L. Mach & Cailin R. Slattery, 2014. "Peer-to-peer lending to small businesses," Finance and Economics Discussion Series 2014-10, Board of Governors of the Federal Reserve System (U.S.).
    3. Karen Mills & Brayden McCarthy, 2014. "The State of Small Business Lending: Credit Access during the Recovery and How Technology May Change the Game," Harvard Business School Working Papers 15-004, Harvard Business School.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tao, Xiaobo & Li, Sijing, 2020. "The developing influence of Chinese culture on finance: A literature review and case-study illustration," Research in International Business and Finance, Elsevier, vol. 54(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. O. Lunyakov V. & N. Lunyakova A. & О. Луняков В. & Н. Лунякова А., 2018. "Развитие каналов кредитования в условиях перехода к цифровой экономике: моделирование спроса // The Development of Credit Channels in the transition to the Digital Economy: Demand Modelling," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(5), pages 76-89.
    2. Elert, Niklas & Henrekson, Magnus, 2021. "Innovative Entrepreneurship as a Collaborative Effort: An Institutional Framework," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 17(4), pages 330-435, June.
    3. Stephen J. Smulowitz & Horacio E. Rousseau & Philip Bromiley, 2020. "The behavioral theory of the (community‐oriented) firm: The differing response of community‐oriented firms to performance relative to aspirations," Strategic Management Journal, Wiley Blackwell, vol. 41(6), pages 1023-1053, June.
    4. Jensen, Thais Laerkholm & Leth-Petersen, Søren & Nanda, Ramana, 2022. "Financing constraints, home equity and selection into entrepreneurship," Journal of Financial Economics, Elsevier, vol. 145(2), pages 318-337.
    5. Brett Barkley & Mark Schweitzer, 2021. "The Rise of Fintech Lending to Small Businesses: Businesses' Perspectives on Borrowing," International Journal of Central Banking, International Journal of Central Banking, vol. 17(1), pages 35-65, March.
    6. Cornelli, Giulio & Frost, Jon & Gambacorta, Leonardo & Jagtiani, Julapa, 2024. "The impact of fintech lending on credit access for U.S. small businesses," Journal of Financial Stability, Elsevier, vol. 73(C).
    7. Lu, Haitian & Wang, Bo & Wang, Haizhi & Zhao, Tianyu, 2020. "Does social capital matter for peer-to-peer-lending? Empirical evidence," Pacific-Basin Finance Journal, Elsevier, vol. 61(C).
    8. Julapa Jagtiani & Catharine Lemieux, 2016. "Small Business Lending After the Financial Crisis: A New Competitive Landscape for Community Banks," Economic Perspectives, Federal Reserve Bank of Chicago, issue 3.
    9. Müller, Karsten, 2022. "Busy bankruptcy courts and the cost of credit," Journal of Financial Economics, Elsevier, vol. 143(2), pages 824-845.
    10. Jagtiani, Julapa & Lemieux, Catharine, 2016. "Small Business Lending: Challenges and Opportunities for Community Banks," Working Papers 16-02, University of Pennsylvania, Wharton School, Weiss Center.
    11. Miller, Steph & HOFFER, ADAM & Wille, David, 2016. "Small-Business Financing after the Financial Crisis: Lessons from the Literature," Working Papers 07306, George Mason University, Mercatus Center.
    12. Agyei-Boapeah, Henry & Evans, Richard & Nisar, Tahir M, 2022. "Disruptive innovation: Designing business platforms for new financial services," Journal of Business Research, Elsevier, vol. 150(C), pages 134-146.
    13. Annalisa Croce & Jose Martí & Carmelo Reverte, 2019. "The role of private versus governmental venture capital in fostering job creation during the crisis," Small Business Economics, Springer, vol. 53(4), pages 879-900, December.
    14. Ádám Kerényi & Júlia Molnár, 2017. "The Impact of the Fintech Phenomenon – Radical Change Occurs in the Financial Sector?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(3), pages 32-50.
    15. Michal Polena & Tobias Regner, 2018. "Determinants of Borrowers’ Default in P2P Lending under Consideration of the Loan Risk Class," Games, MDPI, vol. 9(4), pages 1-17, October.
    16. Quan Tran & Anh‐Tuan Doan & Thao Tran, 2021. "Small and medium enterprises' credit access, ownership structure and job development," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 710-735, December.
    17. Russell Wong & Cathy Zhang & Guillaume Rocheteau, 2017. "Lending Relationships, Banking Crises and Optimal Monetary Policies," 2017 Meeting Papers 152, Society for Economic Dynamics.
    18. Çağlar Hamarat & Daniel Broby, 2022. "Regulatory constraint and small business lending: do innovative peer-to-peer lenders have an advantage?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-25, December.
    19. Jean‐Noël Barrot & Ramana Nanda, 2020. "The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform," Journal of Finance, American Finance Association, vol. 75(6), pages 3139-3173, December.
    20. Chaudhry, Sajid M. & Ahmed, Rizwan & Huynh, Toan Luu Duc & Benjasak, Chonlakan, 2022. "Tail risk and systemic risk of finance and technology (FinTech) firms," Technological Forecasting and Social Change, Elsevier, vol. 174(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:28:y:2019:i:c:p:82-86. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.