An Analysis of SBA Loan Defaults by Maturity Structure
Document Type
Article
Keywords
Small business loans; default risk; survival analysis
Publisher
Springer Science+Business Media B.V.
Abstract
The financial intermediation literature on small business lending focuses on the determinants and costs to credit access. There is, however, little research examining the repayment behavior of small firms that actually receive loans. In this paper, we address this shortcoming in the literature by examining the default behavior of a sample of Small Business Administration 7(a) guaranteed loans with three distinct maturity structures. We employ a discrete-time hazard approach and show that SBA defaults are time-dependent and that the factors impacting default behavior, as well as its timing, are maturity specific. Specifically, we show the importance of loan maturity, seasoning, economic conditions, and other firm-specific factors in predicting the likelihood of SBA loan defaults.
Comments
Published by Springer Science & Business Media B.V. in the Journal of Financial Services Research, volume 28 issue 1/2, 2005. Bryant users may access this article here.