On Government Intervention in the Small-Firm Credit Market and Economic Performance

  • Ben R. Craig
  • William E. Jackson
  • James B. Thomson
Part of the The Milken Institute Series on Financial Innovation and Economic Growth book series (MILK, volume 7)


In this paper we empirically test whether the Small Business Administration’s main guaranteed-lending program—the 7(a) program—has a greater impact on economic performance in low-income markets. This hypothesis is predicated on our previous research (Craig, Jackson, and Thomson, 2007b), where we investigate aggregate SBA guaranteed lending. In that research, we found that the overall impact of SBA-guaranteed lending on economic performance is significant and positive in low-income markets.

Using local labor market employment rates as our measure of economic performance, we find a quantitatively similar positive impact of SBA 7(a)-guaranteed lending. This impact on economic performance is also significantly larger in low-income areas. This result suggests that the 7(a) program, which is the largest SBA guaranteed lending program, is also the main contributor to the positive impact of SBA-guaranteed lending on local market economic performance.


Economic Performance Small Business Business Loan Lending Relationship Loan Guarantee 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Milken Institute 2008

Authors and Affiliations

  • Ben R. Craig
    • 1
  • William E. Jackson
  • James B. Thomson
  1. 1.Federal Reserve Bank of ClevelandClevelandUSA

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