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Climate change is escalating in intensity, frequency, and complexity. Its related threats have profound implications for humanity, particularly women. Measures to cope with and adapt to it have been researched in general and does not focus on the role of women in the specific community, who bear the brunt of the strife associated with climate change. It is from this view that this research assesses the effects of women’s coping and adaptation mechanisms to climate change. Data were collected through household surveys, key informant interviews, observation, and documentary reviews. The collected data were descriptively analysed with the aid of SPSS version 20 and Microsoft Excel. Results indicate that communities understood climate change in terms of variability in rainfall patterns and amounts, water availability, increased incidences of drought, and decreased agricultural yields. Such events reduced agricultural productivit and led to the reoccurrence of food insecurity. Women grew drought-tolerant and early-maturing crop varieties, walking long distances to fetch water, crushing pebbles, and engaging in small vending businesses, which had some effects, including falling into family conflicts, diseases, and food insecurity. The study suggested that there is a need for upscaling awareness and capacity building on good agricultural practices, the provision of loans to small vending businesses, and the provision of inputs that assist women to cope with climatic changes smoothly. [ABSTRACT FROM AUTHOR]

Using supervisory data on small and midsized nonfinancial enterprises (SMEs), we find that those SMEs with higher leverage faced tighter constraints in accessing bank credit after the COVID‐19 outbreak in spring 2020. Specifically, SMEs with higher pre‐COVID leverage obtained a smaller volume of new loans and had to pay a higher spread on them during the pandemic period. Consistent with an inward shift in loan supply, these effects were concentrated in loans originated by banks with below‐median capital buffers. Highly levered SMEs that relied on low‐capital large banks for funding before the pandemic were not able to substitute to other sources of debt financing and thus experienced more of a reduction in total debt as well as a decline in investment and employment. On the other hand, the unprecedented public support, especially the Paycheck Protection Program (PPP), mitigated the adverse real effect stemming from bank credit constraints. [ABSTRACT FROM AUTHOR]

Governments across jurisdictional boundaries leverage financial incentives as a policy strategy to support and develop the business of small and medium enterprises (SMEs). This study is a systematic rety view of the literature on direct governmental finance to SMEs through loans, guarantees, and credit lines between 2000–2021. Among the 89 studies identified for inclusion, four themes emerged: provision of government loans, other government finance provision, external reasons for government finance provision, and the purpose and outcomes of government financing. The key managerial and finance findings in this study are that a greater awareness among SMEs is needed for accessing existing financial incentives from the government. Likewise, regarding government policy, this study highlights a need to clarify the purpose of loan provision to SMEs. Finally, despite calls by researchers for more qualitative assessments of SMEs and targeted government loan provision, there remains a lack of evidence to characterize this interelationship in practice. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Planning Education & Research is the property of Sage Publications Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The economic impact of the COVID-19 pandemic placed many small businesses across the US in financial distress. In response to this, in March 2020 the US government introduced, as part of the CARES Act, the Paycheck Protection Program (PPP) intended to provide relief to small businesses and to preserve jobs during the pandemic. The latter resulted in three waves of funding distributed to small businesses through SBA approved lenders, mainly represented by US banks. By using a panel dataset of 4610 banks over the period Q1 2019–Q4 2020 and by employing a difference-in-differences approach (DiD), I investigate whether participation in the Paycheck Protection Program affected community banks' credit risk-taking behaviour in the post-PPP period, compared to their non-community banking counterparts in the US. I find that the Paycheck Protection Program led community banks to decrease their risk appetite outside of the program relative to non-community banks, consistent with their greater exposure to the commercial real estate sector, heavily hit by the pandemic. My results are robust to a battery of robustness tests and identification strategies. In this research article, I offer novel evidence on the indirect impact of the Paycheck Protection Program as a government-funded stimulus program administered through banks by investigating the indirect effect of the Paycheck Protection Program on the risk-taking of US community banks that dominate lending of PPP loans as a result of their competitive advantage in soft information-intensive small business lending. Such evidence is informative to policymakers as they weigh the merits of various program options to combat the economic damage imposed by the COVID-19 pandemic and as they consider the design of economic stimulus programs in response to future economic crises. [ABSTRACT FROM AUTHOR]

Process automation reduces racial disparities in credit access by enabling smaller loans, broadening banks' geographic reach, and removing human biases from decision making. We document these findings in the context of the Paycheck Protection Program (PPP), where private lenders faced no credit risk but decided which firms to serve. Black‐owned firms obtained PPP loans primarily from automated fintech lenders, especially in areas with high racial animus. After traditional banks automated their loan processing procedures, their PPP lending to Black‐owned firms increased. Our findings cannot be fully explained by racial differences in loan application behaviors, preexisting banking relationships, firm performance, or fraud rates. [ABSTRACT FROM AUTHOR]

This paper exploits an influx of Chinese students to U.S. universities from 2000 through 2018 to study synergies between banks' deposit-taking and lending activities. Banks that are more recognizable by Chinese students experience higher deposit inflows and increase their local credit supply. This credit supply expansion only occurs in information-sensitive credit markets: small business loans and second lien mortgages. Such increase concentrates in nontradable sectors and is more pronounced at locations where managers have more autonomy. The results indicate that deposits from local consumers convey private information about the local credit market, which helps banks in information-sensitive lending. [ABSTRACT FROM AUTHOR]

Peer-to-peer lending, a novel element of Internet finance that links lenders and borrowers via online platforms, has generated large profits for investors. However, borrowers' missed payments have negatively impacted the industry's sustainable growth. It is imperative to create a system that can correctly predict loan defaults to lessen the damage brought on by defaulters. The goal of this study is to fill the gap in the literature by exploring the feasibility of developing prediction models for P2P loan defaults without relying heavily on personal data while also focusing on identifying key variables influencing borrowers' repayment capacity through systematic feature selection and exploratory data analysis. Given this, this study aims to create a computational model that aids lenders in determining the approval or rejection of a loan application, relying on the financial data provided by applicants. The selected dataset, sourced from an open database, contains 8578 transaction records and includes 14 attributes related to financial information, with no personal data included. A loan dataset is first subjected to an in-depth exploratory data analysis to find behaviors connected to loan defaults. Subsequently, diverse and noteworthy machine learning classification algorithms, including Random Forest, Support Vector Machine, Decision Tree, Logistic Regression, Naïve Bayes, and XGBoost, were employed to build models capable of discerning borrowers who repay their loans from those who do not. Our findings indicate that borrowers who fail to comply with their lenders' credit policies, pay elevated interest rates, and possess low FICO ratings are at a higher likelihood of defaulting. Furthermore, elevated risk is observed among clients who obtain loans for small businesses. All classification models, including XGBoost and Random Forest, successfully developed and performed satisfactorily and achieved an accuracy of over 80%. When the decision threshold is set to 0.4, the best performance for predicting loan defaulters is achieved using logistic regression, which accurately identifies 83% of the defaulted loans, with a recall of 83%, precision of 21% and f1 score of 33%. [ABSTRACT FROM AUTHOR]

We investigate patterns of racial bias in small business loans denial rates in the US across different credit risk scores. Using data constructed from the 1998 Survey of Small Business Finances and Kauffman Firm Survey, we find disparities in loan approval ratings between Black and White entrepreneurs in intermediate risk categories, but not for the best and worst categories. We explain these findings with a simple and generalizable statistical discrimination model where banks hold prior beliefs of repayment probability based on the applicant's group and observe noisy signals of creditworthiness. Our model predicts that differences in loan denial rates across groups are more pronounced at middle range values and disappear at very high and very low credit scores. Identifying the likely cause of differential treatment in the market is an important first step in improving representation of minority groups as entrepreneurs. Our findings contribute to this critical effort by delineating the nature of racial bias in the credit market and informing remediation policies. [ABSTRACT FROM AUTHOR]

In response to the COVID-19 pandemic, Congress in conjunction with the Small Business Administration (SBA) created the Paycheck Protection Program (PPP) to help small business owners retain employees. We improve on previous literature exploring the relationship between bank density and PPP loan dispersion by implementing precisely geocoded data to map loans to commuting zones. Revisiting results in Deming and Weiler (2023), we confirm the statistically significant relationship between bank density and PPP loans per small business. We consider three distinct periods of lending to analyze how changes in the PPP loan program rules might have impacted dispersion. The coefficient in the regression of loans per small business on bank density is largest in the final wave of lending, and in commuting zones with high loan densities. This suggests that having additional bank branches in the commuting zone may have helped facilitate rapid dispersion of relief funds to high demand areas during the program. [ABSTRACT FROM AUTHOR]

This study analyzes the relationship between the US Small Business Administration (SBA) loan programs and state‐level employment by utilizing a dynamic first‐difference generalized method of moments fixed effects statistical approach using annual data from 1996 to 2013. The US state‐level panel data show a positive relationship between growth rates in SBA lending per capita and states' civilian employment levels. This relationship appears to be stronger in states with below‐average incomes than in states with higher incomes. This study contributes to the understanding of how SBA lending programs can best help foster state‐level economic development and employment. [ABSTRACT FROM AUTHOR]

We study the relation between electoral politics and government small-business lending, employment, and business formation. We construct novel measures of electoral importance capturing swing and base voters using data from Facebook ad spending, independent political expenditures, the Cook Political Report, and campaign contributions. We find that businesses in electorally important states, districts, and sectors receive more loans following the onset of the COVID-19 crisis, controlling for funding demand and both health and economic conditions. Estimates from survey and observational data show that electoral politics and the allocation of government funds affect employment, small-business activity, and business applications. [ABSTRACT FROM AUTHOR]

Building on the literature on individualistic culture and entrepreneurship, we use variation in a US county's frontier experience (rugged individualism) as a proxy for local individualism to explain variation in SBA loan default rates. For every 10-year increase in frontier experience in a county (ranging from 0 to 63 years between 1790 and 1890), the hazard of default was 0.964 times lower, a small but economically meaningful effect. The effects are more salient for sole proprietors and robust to economic shocks from neighbouring shale boom counties and placebo tests. The results indicate that expanding the eligibility requirements for SBA loans to include individuals from US counties with individualistic cultures may be beneficial. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the extent to which banks use public credit guaranteed loans for distant small business borrowers. Existing studies argue that when banks offer loans for these borrowers, the information asymmetry between them is often severe. These studies then empirically demonstrate how banks can mitigate this problem. We focus instead on the role of Japan's public credit guarantee scheme in mitigating these same information problems, an approach unaddressed in the literature. If banks offer credit guaranteed loans, they suffer few losses from borrower default because the public credit guarantee corporations (not the small business borrowers) make payments to the banks. Therefore, banks can offer loans to informationally opaque and distant borrowers. To conduct the econometric analysis, we use semiannual bank-region-level data from Japan, which allows us to control for several unobserved fixed effects. The results reveal that credit guarantee loan size is larger and the default rate higher when banks offer credit guaranteed loans to distant borrowers. These findings suggest that banks successfully mitigate the losses of distant lending using the public credit guarantee scheme, thereby providing a valuable contribution to the small business finance literature. [ABSTRACT FROM AUTHOR]

Copyright of Pacha: Revista de Estudios Contemporáneos del Sur Global is the property of PACHA REVISTA DE ESTUDIOS CONTEMPORANEOS DEL SUR GLOBAL and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The authors also conducted structured interviews with PPP loan recipients and found that those businesses that received smaller-reported loan amounts had more difficulties and less knowledge about the loan application process than larger loan recipients. They compare PPP lending to existing residential and small business lending patterns to assess the disadvantage of Black and Latinx neighborhoods in receiving PPP loans. Keywords: inclusive economic development; paycheck protection program; PPP; inclusivity EN inclusive economic development paycheck protection program PPP inclusivity 207 210 4 09/20/23 20230801 NES 230801 In 2019, the Federal Reserve Bank of Boston, The Initiative for a Competitive Inner City, and the W.E. Upjohn Institute for Employment Research partnered to gain a better understanding of the mechanisms and contexts that promote inclusive economic growth and development. During the first two phases - when approximately 60% of loans and 70% of loan dollars were allocated - majority Black and Latinx neighborhoods received disproportionately fewer PPP loans and dollars. [Extracted from the article]

The Paycheck Protection Program helped to preserve employment relationships during the sudden shutdown of economic activity due to the COVID-19 pandemic. This paper analyzes whether small business owners' race, ethnicity, or gender played a role in the PPP loan amount received. In 2020 and 2021, non-White-, Hispanic-, and female-owned small businesses received smaller PPP loans than their business counterparts of the same size. Larger companies displayed increased discrepancies in loan amounts. From 2020 to 2021, disparities among non-White business owners decreased; however, female and Hispanic owners continued to receive less in PPP loans than male and non-Hispanic owners. Lee bounds estimates show that female-owned businesses in rural counties received smaller PPP loans per employee than female-owned businesses in urban counties. Structural interviews with PPP loan recipients in Northeast Ohio showed that businesses receiving smaller loan amounts had more difficulties and less knowledge about the loan application process compared to larger loans recipients. [ABSTRACT FROM AUTHOR]

We investigate how communication within banks affects small business lending. Using travel times between a bank's headquarters and its branches to proxy for the costs of communicating soft information, we exploit shocks to these travel times—the introduction of new airline routes—to evaluate the impact of within-bank communication costs on small business loans. We find that reducing headquarters-branch travel time boosts small business lending in the branch's county. Several extensions suggest that new airline routes facilitate in-person communications that boost small-firm lending. [ABSTRACT FROM AUTHOR]

Through a close reading of scattered, disparate, and largely unconnected secondary sources, supplemented with the analysis of primary sources, and backed by economic theory, this paper explores the origins, development, and socio-economic impact of so-called cosignatory lending institutions. These historical institutions were designed to issue small loans to small businesses and households and shared a reliance on cosigners to secure loans and on weekly instalments to repay them. Their shared lending format was flexible enough to display regional variations and this enabled cosignatory lending institutions to operate in societies characterized by notable differences in wealth and economic structure. It also allowed cosignatory lending institutions to fare better in a more urbanized, heterogeneous context than the more well-known credit cooperatives. As such, this systematic overview helps us better understand how credit markets were made more inclusive in urban contexts, which historical circumstances played a role in this, and perhaps even whether and how the success of cosignatory lending institutions may be replicated in present-day developed and less-developed economies. [ABSTRACT FROM AUTHOR]

This paper examines whether the presence of government-guaranteed lenders helps alleviate small business financial constraints during financial crises. The results indicate that during the 2007–09 financial crisis, areas with a greater share of Small Business Administration 7(a) lenders experienced: (1) a 2.2% increase in small business loan volume, (2) a 3.7% increase in small firm employment and 3.5% increase in establishments, and (3) lower loan default rates. Bank–county–year analysis suggests that SBA banks increase their share of lending when they are capital-constrained, and when local median income is lower. Instrumental variable analysis utilizing SBA program characteristics confirms the baseline results. The findings suggest that targeted government support can play a beneficial role in the presence of private credit market frictions, especially when bank capital is limited and small business financial constraints are severe. [ABSTRACT FROM AUTHOR]

This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit and loss-sharing (PLS) behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds – there is little evidence that they perform worse than standard industry benchmarks. Some recent evidence, however, suggests that Islamic bond (Sukuk) issuance destroys value for shareholders. [ABSTRACT FROM AUTHOR]

In this paper, we examine the relationship between small business loan growth and growth in core deposits and Federal Home Loan Banks (FHLBs) advances from 2010 to 2016. Controlling for other effects, we find that the relationships between small business loan growth is positively and significantly related to both FHLB advance growth and core deposit growth, with the coefficient on advance growth being significantly larger than the coefficient on core deposits over the entire sample period. We also tested whether this relationship changed after 2014:3 reflecting the Federal Reserve's relaxation of the regulatory burden on smaller banks. We find that the relationship between loan growth and core deposit growth became more positive after the change, but the relationship between loan growth and FHLB advance growth did not. As a result, we could no longer reject the hypothesis that the coefficient on core deposit growth was equal to the coefficient on FHLB advance growth after 2014:3. This provides some empirical support that the regulatory changes in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA) influenced small business lending by strengthening the impact of the growth in core deposits on the growth of small business lending, complementing the work of Bordo and Duca (2018) that changes in DFA had some unintended negative consequences for lending to small businesses. It also suggests that lowering the regulatory burden faced by community banks (which have a larger proportion of core deposits to total assets than non-community banks) could improve the incentive to increase small business lending. It also implies that FHLB advances remain an important funding tool at the margin to give commercial banking organizations greater liquidity and flexibility in funding their balance sheets. [ABSTRACT FROM AUTHOR]

Whether meant to improve public policy, private lending, or personal choices by individuals, investing in successful entrepreneurs is essential. Successful entrepreneurs typically have high human capital. Investment in entrepreneurs who have lower human capital involves more risk. Research has shown that one type of entrepreneur, franchisees, typically possess lower human capital than entrepreneurs generally. Examining a unique data set of loans by the US government to small businesses, we compare all recipients of these loans, controlling for other relevant lending, economic, and social factors. We find that franchisees have higher default rates and higher lending losses than independents. [ABSTRACT FROM AUTHOR]

This paper analyzes how regulation that promotes greater access to bank credit, such as the Community Reinvestment Act (CRA), impacts the financing of small firms. It finds that when areas become CRA‐eligible, the likelihood of bank lending to local small firms increases and firms reduce late trade credit payments, consistent with loans allowing small firms to pay trade credit more promptly and avoid late payment fees. The effect is more profound in low‐ and moderate‐income areas where financial constraints are tighter due to low bank competition. The effect is also larger for small firms that operate in trade credit‐dependent industries. [ABSTRACT FROM AUTHOR]

The concept of the 'discouraged' borrower is well documented. In this paper, we consider whether smaller firms in the UK who have been previously rejected for bank loans have been scarred by the experience so badly that even in the presence of two exceptionally generous Covid-19 loan guarantee schemes, they still refuse to make an application. Furthermore, we also consider what happens when they do. As banks have either zero or minimal loss exposure, do they still maintain their normal strict lending protocols or do they relax their standards to fulfil the governments' objective of supporting struggling businesses through the crisis? Our findings show that 72% of previously rejected borrowers are reluctant to request loans. We find some evidence that previously scarred firms faced such severe liquidity problems that they relaxed their distrust of banks during the Covid-19 crisis. However, their share of the government-guaranteed loan portfolio was slightly lower suggesting that banks were treating each new loan application on its merits. Plain English Summary: The Covid-19 crisis hit smaller businesses so hard that even previously rejected borrowers were forced to apply for loans to keep them afloat. Previous loan rejections have not discouraged small businesses in the UK in applying for Covid-19 government-guaranteed loans. Banks have used the loan guarantee schemes to continue to supply loans to small business during the pandemic. Our paper analyses the important phenomenon of borrower scarring and discouragement, when potential debtors are self-excluded from the lending market because they have previous rejections or expect a negative bank response. We consider around 45,000 UK small businesses from 2018 to 2020. On the demand side, we find that the economic shock for small businesses during the pandemic dissipates the scarring effect. Specifically, we find that micro and small businesses had the highest loan demand in the first two quarters of the pandemic (from March 2020). On the supply side, we show that scarred borrowers were not routed onto Covid-19 government-guaranteed loan schemes. These findings show the importance of government-backed lending schemes for small businesses during crisis period. [ABSTRACT FROM AUTHOR]

The article analyzes the tools for supporting the development of small business enterprises in wartime conditions. It has been determined that small entrepreneurship (small business) is a type of entrepreneurial activity, based on the adoption of innovative decisions regarding the rational use of available resource potential, characterized by freedom of choice of methods and forms of management and carried out with the aim of maximizing profit. It has been noted that along with the problems that were traditional and understandable, small business enterprises of Ukraine faced new threats caused by military aggression, the intensification of hostilities and the introduction of martial law – the loss and damage of the main property, the need to move it to calmer regions, the destruction of established logistic business connections, loss of traditional sales markets, reduction of financial resources due to hryvnia devaluation and human resources due to mobilization, blocking of bank accounts. The purpose of the research is to determine effective tools capable of ensuring support for the development of small business enterprises in wartime. It has been determined that it is necessary to promote the development of small business at the state level in Ukraine in order to build a high-tech business sector and increase its competitiveness on the global market. The main directions should be the stimulation of innovative activity of small business enterprises, the formation of a favorable innovation and investment climate and regulatory and legal environment. Today, unconventional measures, new legislative acts, special new organizational structures are needed in Ukraine, which should focus attention on the existing problems of the legal use of competition legislation in relation to the development of small business enterprises in wartime conditions. It has been concluded that the main factors contributing to the development of small business enterprises in the considered countries are: financial, credit and investment support; tax support; involvement of small business enterprises in the execution of government orders; support of export activities; personnel support. It has been substantiated that the most common instrument of state support for the development of small business enterprises in almost all countries is the provision of state guarantees for loans to small business enterprises. [ABSTRACT FROM AUTHOR]

We investigate whether bank loans specifically designed to reduce credit constraints for small and medium-sized enterprises (SMEs) have different impacts depending on where the firm is located. Using detailed firm-level data from the state-owned Swedish bank Almi, which specifically lends to credit-constrained SMEs, and coarsened exact matching and difference-in-difference regressions, we study the causal effects of small business loans on firm growth. The results show that receiving a loan has a greater impact on firm growth for those SMEs located in major cities than for firms located in remote rural regions. This result has implications for policies that aim to increase growth in rural regions and suggests that increasing access to credit alone is not sufficient to increase employment growth. [ABSTRACT FROM AUTHOR]

This study examines the effectiveness of the Community Reinvestment Act (CRA) in facilitating small business lending to lower-income neighborhoods. Taking advantage of an exogenous policy shock that resulted in neighborhood-level changes in CRA eligibility, we identify changes in small business lending in tracts that became CRA eligible and CRA ineligible and compare these with control groups constructed in two ways. The results of our difference-in-differences analysis uniformly show increases in the number of loans associated with CRA eligibility, which is consistent with a view that the CRA promotes small business lending in lower-income neighborhoods. [ABSTRACT FROM AUTHOR]

Copyright of FinanzRundschau is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Since May 2015 several U.S. Bank Holding Companies (BHCs) have been newly classified as small banks by regulators, thus benefiting from a friendlier regulatory capital environment. Using a difference-in-differences setting, we show that less regulation on small BHCs boosts small business lending of the affiliated commercial banks. We employ various tests to demonstrate that these findings are attributable to a capital channel where increases in lending are driven by the preferential capital treatment granted to the small BHC. The regulatory capital relief also has some positive effects for the local economy. Overall, the effects of the regulatory capital relief for small BHCs are consistent with its desired policy objectives. This paper was accepted by Tomasz Piskorski, finance. [ABSTRACT FROM AUTHOR]

How small-business owners assess uncertainty and risk in the macroeconomic environment to report optimism toward their business activity is an important research question for policymakers and academics alike. Drawing on a monthly optimism index and a variety of uncertainty and volatility (risk) trackers from January 1986 to June 2017, in line with the expectation that business owners dislike uncertainty in economic policy, economic policy uncertainty may lower optimism. Business investment and sentiment volatility, however, contributed positively to optimism. The findings provide preliminary implications for policymakers in targeting indicators salient to the optimism index of small-business owners. [ABSTRACT FROM AUTHOR]

This paper investigates whether innovative Peer-to-Peer lending by FinTechs' has a regulatory advantage over the big banks in respect of small business lending. We do this through the lens of the regulations imposed by the Dodd-Frank Act, using a difference-in-difference methodology. The Act tightened traditional bank credit standards on business loans, especially for small firms. However, the new FinTech lenders were not subject to the same regulatory burden. We find that traditional banks significantly reduced their lending to small businesses, as compared to their FinTech competitors. Our results suggest that while the Dodd-Frank Act constrained lending to small businesses, innovative new lending models gained a regulatory advantage and the Peer-to-Peer lenders capitalized on this. [ABSTRACT FROM AUTHOR]

The article reports that starting in early spring of 2020, the COVID-19 outbreak caused unprecedented widespread disruptions to economic activity that had a significant impact on businesses and state and local municipalities, as well as individuals. To mitigate some of these disruptions and provide relief to entities affected by the economic fallout from the measures to contain COVID-19.

Drawing on a sample of Small Business Administration (SBA) loans, we develop and test for a two‐sided dynamic learning model to assess the degree of learning‐by‐lending in bank branches and learning‐by‐repaying for borrowers. The results show that learning‐by‐lending is negligible; however, learning‐by‐repaying is small but meaningful, with a shallow learning curve slope of 0.2. The findings have implications for two‐sided learning and for policymakers aiming to lower defaults in SBA loans. [ABSTRACT FROM AUTHOR]

The article offers information on the theoretic analysis of evidence from Paycheck Protection Program (PPP) loans in Durham, North Carolina. It mentions about the research on racial self-identification has focused on modeling the choice of racial/ethnic identity, finding the key factors and incentives that influence the decision to identify as belonging to one racial/ethnic group or another.

The article offers information about the loan disbursement to employer and non-employer businesses in minority communities in the U.S. It mentions that economic impacts of the Covid-19 pandemic have been especially severe for small businesses, workers, and communities of color. It discusses the economic impacts of the pandemic.

The number of community banks in the United States has been declining steadily for decades, as has the share of total industry assets held by these banks. Because community banks play an outsized role in originating loans to small businesses, a continued decline in their numbers and asset holdings could constrain entrepreneurs' access to credit--and, accordingly, constrain growth in the overall economy. One possible explanation for the declining number of community banks is that larger banks have benefitted from economies of scale and outpaced them in efficiency. Stefan Jacewitz examines how the efficiency of community banks has changed since the 2008 global financial crisis. He finds that community banks have in fact seen substantial improvements in efficiency, partially attributable to a relative decline in their brick-andmortar expenses. His results suggest that community banks have made and continue to make meaningful gains even as the banking landscape evolves. [ABSTRACT FROM AUTHOR]

We assess the role of race in loans made through the Paycheck Protection Program (PPP). The PPP program, created by the U.S. government as a response to the Covid-19 pandemic, provides loans to small businesses so they can keep employees on their payroll. We argue that the historical record and PPP program design choices made it likely that many Black-owned businesses received smaller PPP loans than White-owned businesses. Using newly released data on the PPP program, we find that Black-owned businesses received loans that were approximately 50% lower than observationally similar White-owned businesses. The effect is marginally smaller in areas with more bank competition and disappeared over time as changes to the PPP program were implemented allowing for entry by fintechs and other non-traditional lenders. Plain English Summary: We find that Black-owned businesses received loans through the Paycheck Protection Program that were approximately 50 percent lower than White-owned businesses with similar characteristics. However, this difference in loan size shrank over time as more non-bank lenders such as fintechs were allowed to participate in the program and began approving PPP loans. Loan size differences were also slightly smaller in zip codes containing a larger number of bank branches. These results are consistent with prior research which shows lending discrimination by commercial banks against Black borrowers. It is also consistent with studies showing that greater access to and competition among banks and other lenders can reduce discrimination. In light of these results we recommend that policy makers account for existing racial inequalities within banking or other systems in their program design to produce more equitable outcomes. [ABSTRACT FROM AUTHOR]

The reasonable credit scoring model must have strong default identification ability, which means the credit scoring can effectively distinguish between defaulting and nondefaulting customers. The premise to determine the credit score of small enterprises is to determine the weight of indicators. This paper studies 3,045 Chinese small business loans, and two novel weighting methods "Wilks' Lambda method" and "AUC value method" are proposed, The greater the weight they meet, the greater the ability of default identification. The five weighting methods of "Wilks' lambda method," "AUC value method," "G1 method," "entropy method," and "mean square variance method" are compared. An important contribution of the paper is to discover that Wilks' Lambda method is the most effective method for small business. [ABSTRACT FROM AUTHOR]

This study examines the effect of targeted easing (TE), an unconventional monetary policy designed to reduce reserve requirement ratios (RRR) of selected financial institutions, on reducing financing constraints of Chinese small businesses. Using a longitudinal sample of listed small businesses between 2003 and 2018, we find that the implementation of a TE policy significantly reduces financing constraints of small businesses as measured by the cash flow sensitivity. In addition, the policy effect is stronger when reductions in RRR are targeted at financial institutions specialized in small business lending than at banks with a threshold level of small business loans. We also document that small businesses with larger financing needs benefit significantly more from the TE policy and experience a larger reduction in their financial constraints. Moreover, the TE policy effect is more salient in state-owned small businesses than privately controlled enterprises. These results are also robust to alternative measures of financing constraints. [ABSTRACT FROM AUTHOR]

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The problem of attracting financial resources for the growth of small and medium-sized businesses was and remains relevant at all stages of the market economy development, which actualizes market research in the historical context. The article provides a historical retrospective to the problem of the mutual credit societies (MCS) creation and activity in 9 Ukrainian governorates, that were part of the Russian Empire in the second half of the 19th — early 20th centuries. The present paper makes attempt to examine the mechanisms and structure of lending, which was carried out by MCS in general. The objective is to establish the state of MCS’ development in the Ukrainian governorates. The paper also identifies the role of MCS in the lending system that had developed in the second half of the 19th — early 20th centuries in the Russian Empire. It was used several scientific methods which includes an interdisciplinary approach and are characteristic of research in the economic history field. Various historical sources like published statistical data and archival documents and materials were used. The study has found that the establishment and activity of MCS were focused on providing short-term loans to small and medium-sized businesses, that has been operating in governmental and provincial uyezd towns and cities where the banking system was poorly developed. It was carried out the analysis of development dynamic of quantitative and qualitative indicators of MCS activity. It was determined that the MCS share in the credit system of the Russian Empire constituted 5% in 1914. The study has found that rate of the MCS creating practice was influenced by many factors, which were mainly associated with unsuccessful financial reforms, belated legal regulation and weak episodic state support. The change in the structure of the credit-deposit and other operations provided by MCS has been processed. The range of banking services provided by MCS to their members and other clients was investigated. It has been proved the value of the historical experience of MCS crediting and the possibilities of its use to provide financial support for the development of domestic business are outlined. [ABSTRACT FROM AUTHOR]

We examine the effects of physiology and spiritual sentiment on economic decision‐making in the context of Ramadan, an entire lunar month of daily fasting and increased spiritual reflection in the Muslim faith. Using an administrative data set of bank loans originated in Turkey during 2003 to 2013, we find that small business loans originated during Ramadan are 15% more likely to default within two years of origination. Loans originated in hot Ramadans, when adverse physiological effects of fasting are greatest, and those approved by the busiest bank branches perform worse. Despite their worse performance, Ramadan loans have lower credit spreads. [ABSTRACT FROM AUTHOR]

I investigate how the consolidation of securitization entities under SFAS 166 and 167 spills over to banks' supply of small business loans, which are rarely securitized in the United States. This spillover operates through two channels. (1) In the leverage channel, consolidating banks downsize their entire loan portfolios, both small business loans and other loans, in response to increased leverage after consolidation. (2) In the risk management channel, consolidating banks adjust the mix of loans to maintain optimal diversification. The adjustment can increase the supply of small business loans when their performance covaries positively with the performance of other loans. I find that, on average, banks that consolidate more securitized assets reduce small business lending; consequently, counties with a greater market share of consolidating banks experience slower growth in small businesses. I also identify a small group of banks with sufficiently large positive performance covariance that increase small business lending. Data Availability: All untabulated results are available upon request. JEL Classifications: M4; G21. [ABSTRACT FROM AUTHOR]

This article shows that postcrisis stress tests have negative effects on entrepreneurship and innovation at young firms. Exploiting unique data on business-related home equity loans in Home Mortgage Disclosure Act, I show that stress-tested banks strongly cut small business loans secured by home equity, an important source of financing for entrepreneurs. Lower credit supply leads to a relative decline in entrepreneurship in counties with higher exposure to stress-tested banks. The decline is stronger in sectors with a higher share of young firms using home equity financing, that is, in which the reduction in credit hits hardest. More-exposed counties also see a decline in young firms' patent applications as well as labor productivity, reflecting young firms' disproportionate contribution to growth. [ABSTRACT FROM AUTHOR]

Prosocial microfinance institutions have struggled to scale up their efforts toward alleviating poverty while continuing to reach the suitable borrowers without overburdening them with debt. Peer-to-peer crowdfunding organizations try to address this challenge by connecting socially conscious lenders with small-scale entrepreneurs through storytelling. Prior studies described such storytelling as a powerful source of knowledge managed to determine whether a microloan proposal is attractive to potential lenders and ultimately funded. Researchers also devised important categories into which they screen the language within the borrowers' narratives to indicate the prevalence of certain keywords in the stories. To further examine the impact of the borrowers' stories on the likelihood of speedy and successful funding, this paper reviews relevant research and practice and suggests applying natural language processing in a bottom-up approach, where the entirety of narratives is considered for holistically managing information within the narratives and producing the storytelling themes organically, without preconceived categories. This might help aspiring small-scale entrepreneurs and their potential microlenders find the right fit quicker, reducing the opportunity cost and making crowdfunding campaigns more successful. [ABSTRACT FROM AUTHOR]

Conventional wisdom suggests that small businesses are innovative engines of Schumpetarian growth. However, as small businesses, they are likely to face credit rationing in financial markets. If true, then policies that promote lending to small businesses may yield substantial economy-wide returns. We examine the relationship between Small Business Administration (SBA) lending and local economic growth using a spatial econometric framework and a sample of U.S. counties. We find evidence that a county's SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 0.02 to 0.03 percentage points. [ABSTRACT FROM AUTHOR]

The COVID-19 pandemic gravely endangers the health of millions of Americans. Private and public safety measures adopted to reduce infection, however, are also a source of existential risk. As U.S. infection rates increased in early March 2020, unemployment and business dislocation surged. The bipartisan Coronavirus Aid, Relief, and Economic Security Act (CARES Act) represents the first and largest federal attempt to manage economic fallout from the pandemic. The Paycheck Protection Program (PPP) is a lynchpin of the CARES Act. The PPP seeks to mitigate unemployment and closures in several vulnerable sectors of the economy including among tens of millions of small businesses, not-for-profits, and self-employed individuals. The PPP has disbursed over $500 billion to these sectors, providing a lifeline to millions of employees. Nevertheless, media, lawmakers and economists have criticized the PPP for inefficiently or inequitably distributing funds. This Article is the first work of legal scholarship that explains and examines the PPP. As a case study, this Article also provides insight into the design of economic interventions and their limitations, as well as how the lawmaking process generates a narrative allocating responsibility for social trauma. [ABSTRACT FROM AUTHOR]