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The Long-Term Impact of Disaster Loans: The Case of Small Businesses after Hurricane Katrina

Author

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  • Tomoko Hiramatsu

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

  • Maria I. Marshall

    (Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907, USA)

Abstract

The US government provided $2.6 billion of small business administration (SBA) disaster loans to individuals and businesses in Mississippi after Hurricane Katrina in 2005. However, existing literature has not fully explored the firm-level effects of post-disaster loan aid, specifically, the effect on small businesses. The objective of this article is to examine whether SBA disaster loans played a significant role in the performance of small businesses after Hurricane Katrina. Data from a sample of 287 small businesses in Mississippi that were operating before Hurricane Katrina and still operating in 2013 were used in the analysis. Two hypotheses were tested: (1) small business owners that received SBA disaster loans have higher revenue change compared to before Katrina than those who did not receive the loan; (2) small business owners that received SBA disaster loans perceived their businesses to have higher revenue than before Katrina. Receiving a SBA disaster loan played a positive and statistically significant role in determining the actual revenue change and owners’ perception of revenue.

Suggested Citation

  • Tomoko Hiramatsu & Maria I. Marshall, 2018. "The Long-Term Impact of Disaster Loans: The Case of Small Businesses after Hurricane Katrina," Sustainability, MDPI, vol. 10(7), pages 1-15, July.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:7:p:2364-:d:156753
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    References listed on IDEAS

    as
    1. Danes, Sharon M. & Stafford, Kathryn & Loy, Johnben Teik-Cheok, 2007. "Family business performance: The effects of gender and management," Journal of Business Research, Elsevier, vol. 60(10), pages 1058-1069, October.
    2. Maria Marshall & Holly Schrank, 2014. "Small business disaster recovery: a research framework," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 72(2), pages 597-616, June.
    3. Maria Marshall & Linda Niehm & Sandra Sydnor & Holly Schrank, 2015. "Predicting small business demise after a natural disaster: an analysis of pre-existing conditions," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 331-354, October.
    4. Sandra Sydnor & Linda Niehm & Yoon Lee & Maria Marshall & Holly Schrank, 2017. "Analysis of post-disaster damage and disruptive impacts on the operating status of small businesses after Hurricane Katrina," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 85(3), pages 1637-1663, February.
    5. J. Scott Long & Jeremy Freese, 2006. "Regression Models for Categorical Dependent Variables using Stata, 2nd Edition," Stata Press books, StataCorp LP, edition 2, number long2, March.
    6. Sharon M. Danes & Jinhee Lee & Sayali Amarapurkar & Kathryn Stafford & George Haynes & Katherine E. Brewton, 2009. "Determinants Of Family Business Resilience After A Natural Disaster By Gender Of Business Owner," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 333-354.
    7. Maria Marshall & Anna Flaig, 2014. "Marriage, Children, and Self-Employment Earnings: An Analysis of Self-Employed Women in the US," Journal of Family and Economic Issues, Springer, vol. 35(3), pages 313-322, September.
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    Cited by:

    1. Maria I. Marshall & Holly L. Schrank, 2020. "Sink or Swim? Impacts of Management Strategies on Small Business Survival and Recovery," Sustainability, MDPI, vol. 12(15), pages 1-21, August.
    2. Renee D. Wiatt & Yoon G. Lee & Maria I. Marshall & Virginia S. Zuiker, 2021. "The Effect of Cash Flow Problems and Resource Intermingling on Small Business Recovery and Resilience After a Natural Disaster," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 203-214, March.

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