Federal Home Loan Bank lending to community banks: are targeted subsidies necessary?

The Gramm-Leach-Bliley Act of 1999 extended the lending authority of Federal Home Loan Banks to include advances secured by small-enterprise loans of community financial institutions. The authors examine three possible reasons for the extension of this selective credit subsidy to community banks and thrifts, including the need to subsidize community depository institutions, stabilize the Federal Home Loan Banks, and address a market failure for small enterprise loans in rural banking markets. They use two empirical models to investigate whether funding constraints affect small-business lending decisions by rural community banks. The results reject the hypothesis that access to increased funds will increase the amount of small-business loans made by community banks.Small business ; Federal home loan banks

Characterisation of bacterioplankton communities in the meltwater ponds of Bratina Island, Victoria Land, Antarctica

A unique collection of Antarctic aquatic environments (meltwater ponds) lies in close proximity on the rock and sediment-covered undulating surface of the McMurdo Ice Shelf, near Bratina Island (Victoria Land, Antarctica). During the 2009–10 mid-austral summer, sets of discrete water samples were collected across the vertical geochemical gradients of five meltwater ponds (Egg, P70E, Legin, Salt and Orange) for geochemical and microbial community structure analysis. Bacterial DNA fingerprints (using Automated Ribosomal Intergenic Spacer Analysis) statistically clustered communities within ponds based on ANOSIM (R = 0.766, P = 0.001); however, one highly stratified pond (Egg) had two distinct depth-related bacterial communities (R = 0.975, P = 0.008). 454 pyrosequencing at three depths within Egg also identified phylum level shifts and increased diversity with depth, Bacteroidetes being the dominant phyla in the surface sample and Proteobacteria being dominant in the bottom two depths. BEST analysis, which attempts to link community structure and the geochemistry of a pond, identified conductivity and pH individually, and to a lesser extent Ag109, NO2 and V51 as dominant influences to the microbial community structure in these ponds. Increasing abundances of major halo-tolerant OTUs across the strong conductivity gradient reinforce it as the primary driver of community structure in this stud

The importance of financial market development on the relationship between loan guarantees for SMEs and local market employment rates

We empirically examine whether a major government intervention in the small-firm credit market yields significantly better results in markets that are less financially developed. The government intervention that we investigate is SBA-guaranteed lending. The literature on financing small and medium size enterprises (SMEs) suggests that small firms may be exposed to a particular type of market failure associated with credit rationing. And SMEs in markets that are less financially developed will likely face a greater degree of this market failure. To test our hypothesis, we use the level of bank deposits per capita as our relative measure of financial market development, and we use local market employment rates as our measure of economic performance. After controlling for the appropriate cross-sectional market characteristics, we find that SBA-guaranteed lending has a significantly more (less) positive impact on the average annual level of employment when the local market is relatively less (more) financially developed. This result has important implications for public policy directives concerning where SBA-guaranteed lending should be directed.Small Business Administration ; Financial markets ; Small business - Finance ; Employment

Benthic microbial communities of coastal terrestrial and ice shelf Antarctic meltwater ponds.

The numerous perennial meltwater ponds distributed throughout Antarctica represent diverse and productive ecosystems central to the ecological functioning of the surrounding ultra oligotrophic environment. The dominant taxa in the pond benthic communities have been well described however, little is known regarding their regional dispersal and local drivers to community structure. The benthic microbial communities of 12 meltwater ponds in the McMurdo Sound of Antarctica were investigated to examine variation between pond microbial communities and their biogeography. Geochemically comparable but geomorphologically distinct ponds were selected from Bratina Island (ice shelf) and Miers Valley (terrestrial) (<40 km between study sites), and community structure within ponds was compared using DNA fingerprinting and pyrosequencing of 16S rRNA gene amplicons. More than 85% of total sequence reads were shared between pooled benthic communities at different locations (OTU0.05), which in combination with favorable prevailing winds suggests aeolian regional distribution. Consistent with previous findings Proteobacteria and Bacteroidetes were the dominant phyla representing over 50% of total sequences; however, a large number of other phyla (21) were also detected in this ecosystem. Although dominant Bacteria were ubiquitous between ponds, site and local selection resulted in heterogeneous community structures and with more than 45% of diversity being pond specific. Potassium was identified as the most significant contributing factor to the cosmopolitan community structure and aluminum to the location unique community based on a BEST analysis (Spearman's correlation coefficient of 0.632 and 0.806, respectively). These results indicate that the microbial communities in meltwater ponds are easily dispersed regionally and that the local geochemical environment drives the ponds community structure

SBA guaranteed lending and local economic growth

Increasingly, policymakers look to the small business sector as a potential engine of economic growth. Policies to promote small businesses include tax relief, direct subsidies, and indirect subsidies through government lending programs. Encouraging lending to small business is the primary policy objective of the Small Business Administration's (SBA) loan-guarantee program. Using a panel data set of SBA guaranteed loans, we assess whether SBA guaranteed lending has an observable impact on local economic performance. We find a positive and significant (although economically small) relationship between the relative levels of SBA guaranteed lending in a local market and the future per capita income growth in that market.

Does government intervention in the small-firm credit market help economic performance?

The guaranteed lending programs of the Small Business Administration (SBA) are large and growing rapidly. The SBA’s fiscal year 2008 performance budget calls for $25 billion in guaranteed loans for small businesses—a new record for the agency. Some critics of SBA programs suggest they do not help small businesses or overall economic performance. Other critics suggest that these programs unfairly benefit the financial institutions that participate in SBA’s guaranteed lending programs. While very little serious empirical evidence exists on whether the net economic impact of the SBA’s guaranteed lending programs is positive or negative, a few recent studies provide some insight into the question. In general, they suggest a small positive impact of the SBA’s programs on economic performance. However, the results are very tentative and further research is needed to declare a more definitive position. We provide a general overview of the SBA’s guaranteed lending programs and summarize the results of these studies.Small Business Administration ; Small business - Finance ; Economic development

Are SBA loan guarantees desirable?

Over the last 10 years, the Small Business Administration has been responsible for well over $100 billion in small business credit extensions, more than any single private lender. This Commentary explores the motivations for such a large investment of taxpayer dollars.Small Business Administration ; Loans ; Credit

Small firm credit market discrimination, SBA-guaranteed lending, and local market economic performance

We empirically test whether SBA-guaranteed lending has a greater impact on economic performance in markets with a high percentage of potential minority small businesses. This hypothesis is predicated on priors related to three overlapping assumptions. These three assumptions are: (1) The classic type of credit rationing developed in the seminal paper by Stiglitz and Weiss (1981) is more likely to occur in markets with a higher per capita percentage of minority small businesses because such markets are more likely to have more severe information asymmetry problems, (2) SBA-guaranteed lending is likely to reduce these credit rationing problems—thus improving the level of development of the local financial market, and (3) increased local financial market development helps to lubricate the wheels of economic performance (Rajan and Zingales, 1998). Using local labor market employment rates as our measure of economic performance, we find evidence consistent with this proposition. In particular, we find a positive and significant impact on the average annual level of employment in a local market of SBA-guaranteed lending in that local market. This impact is 200 percent larger in markets with a high percentage of potential minority small businesses. This result has important implications for public policy in general and SBA-guaranteed lending in particular.Small business - Finance ; Small Business Administration ; Discrimination in consumer credit