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HOW DID THE FINANCIAL CRISIS AFFECT SMALL‐BUSINESS LENDING IN THE UNITED STATES?
Author(s) -
Cole Rebel A.,
Damm Jason
Publication year - 2020
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/jfir.12225
Subject(s) - treasury , profitability index , business , financial system , asset (computer security) , small business , financial crisis , affect (linguistics) , finance , capital (architecture) , monetary economics , economics , macroeconomics , linguistics , philosophy , computer security , archaeology , computer science , history
We analyze changes in lending by U.S. banks to businesses from 1994 to 2011. We find that lending to businesses, and in particular to small businesses, declined precipitously following onset of the financial crisis. We also examine the relative changes in business lending by banks that did, and did not, receive Troubled Asset Relief Program (TARP) funds from the U.S. Treasury, and find that banks receiving capital injections from the TARP failed to increase their small‐business lending. Finally, we find strong and significant positive relations of both bank capital adequacy and profitability with small‐business lending.