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Access to capital and small business growth: evidence from CRA loans data

Author

Listed:
  • Anil Rupasingha

    (Economic Research Service/USDA)

  • Kyungsoon Wang

    (Georgia Institute of Technology)

Abstract

In this paper, we use geographic and time variation of the Community Reinvestment Act (CRA) small business loans to study the effects of access to capital on small business growth in the USA at the county level. Grounded in theoretical models of imperfect financial markets and entrepreneurship dynamics, we use a panel of 3050 counties over the 1996–2010 period and find that, in general, CRA loans have a statistically significant positive effect on small business growth for the full sample of 3050 counties. This effect holds for different estimation techniques and robustness checks. More importantly, the results hold when we correct for the endogeneity of the CRA loans. The results also hold when the counties are classified into urban, rural, and low and moderate income.

Suggested Citation

  • Anil Rupasingha & Kyungsoon Wang, 2017. "Access to capital and small business growth: evidence from CRA loans data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(1), pages 15-41, July.
    • Handle: RePEc:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0814-9
    DOI: 10.1007/s00168-017-0814-9
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    2. Prieger, James E., 2023. "Local banking markets and barriers to entrepreneurship in minority and other areas," Journal of Economics and Business, Elsevier, vol. 124(C).
    3. Rupasingha, Anil & Pender, John & Wiggins, Seth, 2018. "USDA’s Value-Added Producer Grant Program and Its Effect on Business Survival and Growth," Economic Research Report 276236, United States Department of Agriculture, Economic Research Service.
    4. Kim, Mee Jung, 2023. "Impact of the Community Reinvestment Act on small business employment in lower income neighborhoods," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    5. Kenneth E. Poole & Allison Forbes & Nichelle Williams, 2023. "Applied Regional Economic Research Can Improve Development Strategies and Drive Better Outcomes," Economic Development Quarterly, , vol. 37(1), pages 85-95, February.
    6. Sergio A. Contreras, 2022. "One size does not fit all: evaluating the impact of microenterprise measurement on policy evaluation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 587-613, June.

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    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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