Small business administration loans, economic development, and state‐level employment

Abstract

AbstractThis 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.