Traci L. Mach

Examining the Impact of Credit Access on Small Firm Survivability

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.

Performance pay and fringe benefits

Uses longitudinal data from the NLSY79 to examine the effect of a broad variety of performance‐based pay schemes and fringe benefits on male and female wages between 1988 and 1998. Specifically, analyzes whether the offer of various performance‐based pay schemes and fringe benefits functions as an alternative work incentive, eliciting greater effort and raising wages or, instead, it is accompanied by lower wages, as predicted by compensating wage theory. The results indicate that, while most performance‐based pay schemes are associated with higher wages to differing extents across gender, tips are commonly accompanied by lower wages among men. Similarly, while the offer of a retirement plan appears to as a work incentive raising male and female wages, workers are willing to trade wages for jobs offering life and medical insurance.

The Impact of Schools on Juvenile Substance Initiation and Use

We use data from the two rounds of the NLSY97 and the corresponding QED data to examine the effectiveness of school endowments and curricula in targeting juvenile use of tobacco, alcohol, and marijuana. Our results support the notion that schools matter in reducing juvenile involvement in substance use. Higher discretionary dollars per pupil are linked to reduced rates of juvenile initiation and repetitive use rates of cigarettes and marijuana. Additionally, school curricula, as indicated by the implementation of year round classes and some innovative and after-school programs—such as gifted and talented, attendance monitoring, homework hotline, international baccalaureate, extended-day, and mentoring, programs, affect both juvenile initiation to tobacco and alcohol use and juvenile repetitive use of tobacco and alcohol. In particular, we find that juvenile initiation to cigarette use is approximately between 2 percentage points and 3 percentage points lower among youths attending schools with gifted and talented and international baccalaureate programs. In addition, juvenile repetitive cigarette use is approximately 54%, 52%, and 48% lower among youths attending schools offering year round classes, international baccalaureate, and twenty-first century programs, respectively. Finally, juvenile initiation to alcohol use and juvenile repetitive use of alcohol are approximately 3% and 20% lower, respectively, among youths in schools offering gifted and talented programs. In sum, while these programs are not implemented to address substance use problems among the student body, we find that the implementation of these programs is often accompanied by a reduction in juvenile initiation and repetitive substance use.

Peer-to-Peer Lending to Small Businesses

The current paper examines loan-level data from Lending Club to look at peer-to-peer borrowing by small businesses. We begin by looking at characteristics of loan applications that were and were not funded and then take a more in-depth look at funded applications. Summary statistics show an increasing number of small business loan applications over time. Beginning in 2010—when consistent measures of loan purpose were recorded for all applications--loan applications for small businesses were on average less likely than loans for other purposes to have been funded. However, logistic regression results that control for the quality of the application show that, holding all else constant, applications for a loan for a small business were almost twice as likely to have been funded than loans for other purposes. Focusing on funded applications, we note that funded business loans were slightly larger on average than loans funded for other purposes but paid similar interest rates. However, relative to small business loans from traditional sources, peer-to-peer small business borrowers paid an interest rate that was about two times higher. Regression results that control for application quality show that peer-to-peer loans for small businesses were charged almost a percentage point interest rate premium over non-business loans. Logistic regression results that look at loan performance indicate that loans for small businesses were much more likely to be delinquent or charged off.

The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses

Following the financial crisis, total outstanding loans to businesses by commercial banks dropped off substantially. Large loans outstanding began to rebound by the third quarter of 2010 and essentially returned to their previous growth trajectory while small loans outstanding continued to decline. Furthermore, much of the drop in small business loans outstanding was evident at community banks. To address this perceived lack of supply of credit to small businesses, the Small Business Lending Fund (SBLF) was created as part of the 2010 Small Business Jobs Act. The fund was intended to provide community banks with low-cost funding that they could then lend to their small business customers. As of December 31, 2013, the U.S. Department of the Treasury reports that SBLF participants had increased their small business lending by

Survey of Consumer Finances: Presentation

12.5 billion over their baseline numbers. The current paper uses Call Report data from community banks and thrift institutions to look at the impact of receiving funds from SBLF on their small business lending. The analysis controls for economic and demographic conditions, market structure and competition. Simple regression estimates indicate that participants in the SBLF program increased their small business lending by about 10 percent more than their non-participating counterparts, in line with numbers reported by Treasury. However, estimates that control for the ongoing growth path in small business lending indicate no statistically significant impact of SBLF participation on small business lending.

The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses: The Impact of the Small Business Lending Fund

The Survey of Consumer Finances is a triennial survey sponsored by the Federal Reserve Board to provide detailed information on the assets, liabilities, and other demographic characteristics of U.S. families.

Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009

Following the financial crisis, total outstanding loans to businesses by commercial banks dropped off substantially. Large loans outstanding began to rebound by the third quarter of 2010 and essentially returned to their previous growth trajectory while small loans outstanding continued to decline. Furthermore, much of the drop in small business loans outstanding was evident at community banks. To address this perceived lack of supply of credit to small businesses, the Small Business Lending Fund (SBLF) was created as part of the 2010 Small Business Jobs Act. The fund was intended to provide community banks with low‐cost funding that they could then lend to their small business customers. As of 31 December, 2013, the US Department of the Treasury reports that SBLF participants had increased their small business lending by

Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009

12.5 billion over their baseline numbers. The current paper uses Call Report data from community banks and thrift institutions to look at the impact of receiving funds from SBLF on their small business lending. The analysis controls for economic and demographic conditions, market structure and competition. Simple regression estimates indicate that participants in the SBLF program increased their small business lending by about 10 percent more than their non‐participating counterparts, in line with numbers reported by Treasury. However, estimates that control for the ongoing growth path in small business lending indicate no statistically significant impact of SBLF participation on small business lending.