Fintech, Small Business & the American Dream
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34. Mercedes Delgado and Michael E. Porter, “Clusters and the Great Recession,” June 8, 2017, http://mitsloan.mit.edu/shared/ods/documents/Fang_L_CV_web_09-19-2014.pdf?DocumentID=4075 .
35. Aaron Chatterji, Edward L. Glaeser, and William R. Kerr, “Clusters of Entrepreneurship and Innovation,” NBER Working Paper , no. 19013, May 2013, https://www.nber.org/papers/w19013 .
36. John Reid Blackwell, “Rolls-Royce Could Employ Up to 500 in Prince George,” Richmond Times-Dispatch , October 20, 2009, https://www.richmond.com/business/rolls-royce-could-employ-up-to-in-prince-george/article_a238c9f9-bc24-5c67-a42e-0d643ab5df03.html .
37. Jorge Guzman and Scott Stern, “Nowcasting and Placecasting Entrepreneurial Quality and Performance,” NBER Working Paper , no. 20952, February 2015, http://www.nber.org/papers/w20954 .
38. Ramana Nanda, “Financing High-Potential Entrepreneurship,” IZA World of Labor , 2016, https://wol.iza.org/articles/financing-high-potential-entrepreneurship .
39. Ryan Decker, John Haltiwanger, Ron S. Jarmin, and Javier Miranda, “The Secular Decline in Business Dynamism in the U.S,” University of Maryland Working Paper , June 2014, http://econweb.umd.edu/~haltiwan/DHJM_6_2_2014.pdf .
40. John Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs? Small Versus Large Versus Young,” The Review of Economics and Statistics 95, no. 2 (2013), https://www.mitpressjournals.org/doi/10.1162/REST_a_00288 .
41. Jason Wiens and Chris Jackson, “The Importance of Young Firms for Economic Growth,” Ewing Marion Kauffman Foundation Entrepreneurship Policy Digest , September 2015, http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/the-importance-of-young-firms-for-economic-growth .
42. Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, “The Role of Entrepreneurship in US Job Creation and Economic Dynamism,” The Journal of Economic Perspectives 28, no. 3 (2014): 3–24, https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.28.3.3 .
43. Faith Karahan, Benjamin Pugsley, and Aysegül Sahin, “Understanding the 30-year Decline in the Startup Rate: A General Equilibrium Approach,” May 2015, http://conference.iza.org/conference_files/EntreRes2015/pugsley_b22364.pdf .
44. Jan W. Rivkin, Karen G. Mills, and Michael E. Porter, “The Challenge of Shared Prosperity: Findings of Harvard Business School’s 2015 Survey on American Competitiveness,” Harvard Business School, September 2015, http://www.hbs.edu/competitiveness/Documents/challenge-of-shared-prosperity.pdf .
45. Karthik Krishnan and Pinshuo Wang, “The Cost of Financing Education: Can Student Debt Hinder Entrepreneurship?” Forthcoming, Management Science , November 2017, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2586378 ; Brent Ambrose, Larry Cordell, and Shuwei Ma, “The Impact of Student Loan Debt on Small Business Formation,” Federal Reserve Board of Philadelphia Working Paper , no. 15–26, July 2015, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2633951 .
Chapter 3
1. Interview with Pilar Guzman Zavala, August 31, 2017.
2. Nancy Dahlberg, “Passion, Perseverance Powered Empanada Maker through Tough Start,” Miami Herald , July 10, 2016, http://www.miamiherald.com/news/business/biz-monday/article88785767.html .
3. Author’s analysis of data from the Business Dynamics Statistics, U.S. Census Bureau , last modified September 23, 2015, https://www.census.gov/ces/dataproducts/bds/data_firm.html .
4. Mark Gertler and Simon Gilchrist, “Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms,” The Quarterly Journal of Economics 109, no. 2 (May 1994), http://www.uh.edu/~bsorense/Gertler&Gilchrist.MP%20business%20cycles%20and%20behavior%20of%20small%20manufactoring%20firms.pdf ; Randall S. Kroszner, Luc Laeven, and Daniela Klingebiel, “Banking Crises, Financial Dependence and Growth,” Journal of Financial Economics 84, no. 1 (2007), http://www.sciencedirect.com/science/article/pii/S0304405X0600208X ; Gert Wehinger, “SMEs and the Credit Crunch: Current Financing Difficulties, Policy Measures, and a Review of Literature,” OECD Journal: Financial Market Trends , no. 2 (2013), https://www.oecd.org/finance/SMEs-Credit-Crunch-Financing-Difficulties.pdf .
5. Diana Farrell and Chris Wheat, “Cash Is King: Flows, Balances, and Buffer Days: Evidence from 600,000 Small Businesses,” JPMorgan Chase and Co. Institute, September 2016, https://www.jpmorganchase.com/content/dam/jpmorganchase/en/legacy/corporate/institute/document/jpmc-institute-small-business-report.pdf .
6. “2017 Small Business Credit Survey: Report on Employer Firms,” Federal Reserve Banks , May 2018, p. 6, https://www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2018/sbcs-employer-firms-report.pdf .
7. Brian S. Chen, Samuel G. Hanson, and Jeremy C. Stein, “The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets,” NBER Working Paper , no. 23843, September 2017, http://www.nber.org/papers/w23843 .
8. Roisin McCord, Edward Simpson Prescott, and Tim Sablik, “Explaining the Decline in the Number of Banks Since the Great Recession,” EB15-03 (March 2015), https://www.richmondfed.org/~/media/richmondfedorg/publications/research/economic_brief/2015/pdf/eb_15-03.pdf .
9. “FDIC Community Banking Study,” Community Banking Initiative , December 2012, https://www.fdic.gov/regulations/resources/cbi/study.html .
10. Mark Gertler and Simon Gilchrist, “Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms,” The Quarterly Journal of Economics 109, no. 2 (May 1994), http://www.uh.edu/~bsorense/Gertler&Gilchrist.MP%20business%20cycles%20and%20behavior%20of%20small%20manufactoring%20firms.pdf .
11. Randall S. Kroszner, Luc Laeven, and Daniela Klingebiel, “Banking Crises, Financial Dependence and Growth,” Journal of Financial Economics 84, no. 1 (2007), http://www.sciencedirect.com/science/article/pii/S0304405X0600208X .
12. Burcu Duygan-Bump, Alexey Levkov, and Judit Montoriol-Garriga, “Financing Constraints and Unemployment: Evidence from the Great Recession,” Federal Reserve Bank of Boston Working Paper , no. QAU10-6 (December 2011), https://www.bostonfed.org/publications/risk-and-policy-analysis/2010/financing-constraints-and-unemployment-evidence-from-the-great-recession.aspx .
13. Gabriel Chodorow-Reich, “The Employment Effects of Credit Market Disruptions: Firm-level Evidence from the 2008–9 Financial Crisis,” Quarterly Journal of Economics 129, no. 1 (2014): 1–59, https://scholar.harvard.edu/chodorow-reich/publications/employment-effects-credit-market-disruptions-firm-level-evidence-2008-09 .
14. Note: The Federal Insurance Deposit Commission (FDIC) requires banks to file quarterly call reports which include total assets on bank balance sheets by loan size, but do not include loan origination data. Thus, they describe the stock of loans but not the flows.
15.Interview with George Osborne, September 2016.
16. Author’s analysis of data from “Loans to Small Businesses and Small Farms,” Federal Deposit Insurance Corporation Quarterly Banking Profile , accessed August 23, 2018, https://www.fdic.gov/bank/analytical/qbp/ .
17. Note: The Small Business Administration Loan Guaranty Program allows banks to make small business loans with the promise that if the borrower defaults, the federal government will bear a designated portion of the loss.
18. Robert Jay Dilger, “Small Business Administration 7(a) Loan Guaranty Program,” Congressional Research Service , November 7, 20
18, https://fas.org/sgp/crs/misc/R41146.pdf .
19. Karen Gordon Mills and Brayden McCarthy , “The State of Small Business Lending: Innovation and Technology and the Implications for Regulation,” Harvard Business School Working Paper , no. 17-042 (2016): 121, http://www.hbs.edu/faculty/Publication%20Files/17-042_30393d52-3c61-41cb-a78a-ebbe3e040e55.pdf .
20. “Small Business Lending Fund,” U.S. Department of the Treasury , accessed January 19, 2018, https://www.treasury.gov/resource-center/sb-programs/Pages/Small-Business-Lending-Fund.aspx .
21. Kevin T. Jacques, Richard Moylan, and Peter J. Nigro, “Commercial Bank Small Business Lending Pre and Post Crisis,” The Journal of Entrepreneurial Finance 18, no. 1 (Spring 2016): 22–48, https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1275&context=jef .
22. Jeff Zients, “Getting Money to Small Businesses Faster,” The White House Blog , September 14, 2011, https://www.whitehouse.gov/blog/2011/09/14/getting-money-small-businesses-faster .
23. Jean-Noel Barrot and Ramana Nanda, “The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform,” Harvard Business School Working Paper , no. 17-004, July 2016, (Revised July 2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2808666 .
24. Federal News Radio Staff, “Necole Parker, Founder and CEO of The ELOCEN Group LLC,” Federal News Radio , July 31, 2014, https://federalnewsradio.com/federal-drive/2014/07/necole-parker-founder-and-ceo-of-the-elocen-group-llc/ .
25. “Helping Small Business Overcome Barriers to Growth,” United States House of Representatives Committee on Small Business, Testimony of Steven H. Strongin, February 14, 2018, https://smallbusiness.house.gov/uploadedfiles/2-14-18_strongin_testimony.pdf .
26. Paul Davidson, “U.S. Economy Regains All Jobs Lost in Recession,” USA Today , June 6, 2014, https://www.usatoday.com/story/money/business/2014/06/06/may-jobs-report/10037173/ .
27. Collin Eaton, “Jamie Dimon Dishes on Small Business Lending , Regulatory Issues,” Houston Business Journal , February 27, 2013, https://www.bizjournals.com/houston/blog/money-makers/2013/02/dimon-dishes-on-small-business.html .
28. William C. Dunkelberg and Holly Wade, “NFIB Small Business Economic Trends,” National Federation of Independent Business , June 2012, 18, http://www.nfib.com/Portals/0/PDF/sbet/sbet201206.pdf .
29. Small Business Survey Topline—3rd Qtr 2017,” Wells Fargo and Gallup , July 19, 2017, p. 8–9, https://assets.ctfassets.net/ewhhtaabqlyo/2ytUTLKjMcM4y4yEMYSMIs/4283c944c34c9345ea9b16bb028f226f/Wells_Fargo_Small_Business_Survey_Q3_2017_FINAL7-19-2017.pdf .
30. Manuel Adelino, Antoinette Schoar, and Felipe Severino, “House Prices, Collateral and Self-Employment,” Journal of Financial Economics 117, no. 2 (2015): 288–306, https://doi.org/10.1016/j.jfineco.2015.03.005 .
31. Karen Gordon Mills and Brayden McCarthy , “The State of Small Business Lending: Credit Access During the Recovery and How Technology May Change the Game,” Harvard Business School Working Paper , no. 15-004 (2014): 30, http://www.hbs.edu/faculty/Publication%20Files/15-004_09b1bf8b-eb2a-4e63-9c4e-0374f770856f.pdf .
32. “Small Business, Credit Access, and a Lingering Recession,” National Federation of Independent Business , January 2012, 35, https://www.nfib.com/Portals/0/PDF/AllUsers/research/studies/small-business-credit-study-nfib-2012.pdf .
33. Michael D. Bordo and John V. Duca, “The Impact of the Dodd-Frank Act on Small Business,” NBER Working Paper , no. 24501, April 2018, www.nber.org/papers/w24501 .
34. Martin N. Baily, Justin Schardin, and Phillip L. Swagel, “Did Policymakers Get Post-Crisis Financial Regulation Right?,” Bipartisan Policy Center , September 2016, https://cdn.bipartisanpolicy.org/wp-content/uploads/2016/09/BPC-FRRI-Post-Crisis-Financial-Regulation.pdf .
35. Steve Strongin, Sandra Lawson, Amanda Hindlian, Katherine Maxwell, Koby Sadan, and Sonya Banerjee, “Who Pays for Bank Regulation?,” Goldman Sachs Global Markets Institute, June 2014, https://www.goldmansachs.com/insights/public-policy/regulatory-reform/who-pays-for-bank-regulation-pdf.pdf .
36. Sam Batkins and Dan Goldbeck, “Six Years After Dodd-Frank: Higher Costs, Uncertain Benefits,” American Action Forum , July 20, 2016, https://www.americanactionforum.org/insight/six-years-dodd-frank-higher-costs-uncertain-benefits/ .
37. Llewellyn Hinkes-Jones, “How Much Did Dodd-Frank Cost? Don’t Ask Banks,” Bloomberg BNA , February 2, 2017, https://www.bna.com/doddfrank-cost-dont-n57982083211/ .
38. Ron Feldman, Ken Heinecke, and Jason Schmidt, “Quantifying the Costs of Additional Regulation on Community Banks,” Federal Reserve Bank of Minneapolis , May 30, 2013, https://www.minneapolisfed.org/research/economic-policy-papers/quantifying-the-costs-of-additional-regulation-on-community-banks .
39. Drew Dahl, Andrew Meyer, and Michelle Neely, “Bank Size, Compliance Costs and Compliance Performance in Community Banking,” Federal Reserve Bank of St. Louis , May 2016, https://www.communitybanking.org/~/media/files/communitybanking/2016/session2_paper2_neely.pdf .
40. “2017 Small Business Credit Survey: Report on Employer Firms,” Federal Reserve Banks , May 2018, p. 7, https://www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2018/sbcs-employer-firms-report.pdf .
Chapter 4
1. Ruth Simon, “What Happened When a Town Lost Its Only Bank Branch,” The Wall Street Journal , December 25, 2017, https://www.wsj.com/articles/what-happened-when-a-town-lost-its-only-bank-branch-1514219228 .
2. Ann Marie Wiersch and Scott Shane, “Why Small Business Lending Isn’t What It Used to Be,” Federal Reserve Bank of Cleveland , August 14, 2013, https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/2013-economic-commentaries/ec-201310-why-small-business-lending-isnt-what-it-used-to-be.aspx .
3. “2017 Small Business Credit Survey: Report on Employer Firms,” Federal Reserve Banks , May 2018, p. 13, https://www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2018/sbcs-employer-firms-report.pdf .
4.Ibid.
5. Note: Banks with assets from $10 billion to $250 billion, and large banks with assets over $250 billion do provide 67% of small business loans by dollars. No data exists on the number of loans , but the hypothesis is that community banks provide a larger number of small-dollar loans , those under $250,000. Having better data on the number of loans made by size of bank would provide further clarity on the role and importance of community banks.
6. Allen Berger and Gregory Udell, “Relationship Lending and Lines of Credit in Small Firm Finance,” Journal of Business 68, no. 3 (1995): 351–381, https://scholarcommons.sc.edu/cgi/viewcontent.cgi?article=1009&context=fin_facpub .
7. Jonathan Scott and William Dunkelberg, “Bank Consolidation and Small Business Lending: A Small Firm Perspective,” Proceedings (1991): 328–361.
8. Brian Uzzi and James Gillespie, “Corporate Social Capital and the Cost of Financial Capital: An Embeddedness Approach,” in Corporate Social Capital and Liability , eds. R.T.A.J. Leenders and S.M. Gabbay (Boston, MA: Springer, 1999), 446–459.
9. Robert DeYoung, Dennis Glennon, and Peter Nigro, “Borrower-Lender Distance, Credit Scoring, and Loan Performance: Evidence from Informational-Opaque Small Business Borrowers,” Journal of Financial Intermediation 17, no. 1 (2008): 113–143, https://doi.org/10.1016/j.jfi.2007.07.002 .