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Examining the impact of credit access on small firm survivability

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  • Traci L. Mach
  • John D. Wolken

Abstract

This paper examines the effects of credit availability on small firm survivability over the period 2004 to 2008 for non-publicly traded small enterprises. Using data from the 2003 Survey of Small Business Finances, we develop failure prediction models for a sample of small firms that were confirmed to have been in business as of December 2003, with particular attention to the impact of credit constraints. We find that credit constrained firms were significantly more likely to go out of business than non constrained firms. Moreover, credit constraint and credit access variables appear to be among the most important factors predicting which small U.S. firms went out of business during the 2004-2008 period even though an extensive set of firm, owner, and market characteristics were also included as explanatory factors.

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File URL: http://www.federalreserve.gov/pubs/feds/2011/201135/201135abs.html
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File URL: http://www.federalreserve.gov/pubs/feds/2011/201135/201135pap.pdf
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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2011-35.

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Date of creation: 2011
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Handle: RePEc:fip:fedgfe:2011-35

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Related research

Keywords: Small business ; Business failures;

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