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Bank Loans as Predictors of Small Business Start-Up Survival

Author

Listed:
  • Thomas Astebro
  • Irwin bernhardt

Abstract

This paper reports an investigation of the validity and reliability of a set of predictors of the survival of small, start-up companies. Having a bank loan was a significant positive predictor of survival . The use of the model as a predictor of survival was investigated on an hold-out sample. One group of companies in the hold-out sample had high predicted probabilities of survival, in spite of note having bank loans. This group had a survival rate that was slightly better than that of companies in the hold-out sample that had obtained bank loans. The group with high survival rate, but without bank loans, made greater use of other forms of loans. The group of companies with a high survival rate, but without bank loans, accounted for 22% of the hold-out.

Suggested Citation

  • Thomas Astebro & Irwin bernhardt, 1999. "Bank Loans as Predictors of Small Business Start-Up Survival," Working Papers 99-4, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:99-4
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    File URL: https://www2.census.gov/ces/wp/1999/CES-WP-99-04.pdf
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    Cited by:

    1. Cowling, Marc, 2010. "The role of loan guarantee schemes in alleviating credit rationing in the UK," Journal of Financial Stability, Elsevier, vol. 6(1), pages 36-44, April.

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