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Does Increasing Reliance on Student Debt Explain Declines in Entrepreneurial Activity? Posing the Question, Gathering Evidence, Considering Policy Options

January 27, 2015 Comments off

Does Increasing Reliance on Student Debt Explain Declines in Entrepreneurial Activity? Posing the Question, Gathering Evidence, Considering Policy Options
Source: Urban Institute

Concerns about declining entrepreneurial activity, rising student debt, and the possible relationship between the two deserve attention. New business enterprises can support innovation and increase employment, so any trend that might be interfering with individuals’ opportunities to take risks, finance start-ups, and build enterprises is worth exploring.

Gaming the Rules: Industry Interference Shuts Out Small Business Voices, Delays and Weakens Public Protections

January 7, 2015 Comments off

Gaming the Rules: Industry Interference Shuts Out Small Business Voices, Delays and Weakens Public Protections
Source: Center for Effective Government

A new report released today by the Center for Effective Government finds that trade associations and their big business members are shutting genuine small business voices out of the federal rulemaking process and weakening some crucial public protections.

By law, the U.S. Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), and the Consumer Financial Protection Bureau (CFPB) are required to initiate a special small business review panel process if they believe a proposed standard may have a significant economic impact on small businesses. But Gaming the Rules: How Big Business Hijacks the Small Business Review Process to Weaken Public Protections shows that this process has been captured by trade associations and their large corporate members, rendering the process duplicative and wasteful.

The review panels include officials from the rulemaking agency, the White House Office of Information and Regulatory Affairs, and the Small Business Administration’s Office of Advocacy, who consult with a group of small business representatives. But the small business representatives are sometimes members or staff of industry-wide trade associations, including corporate lawyers and lobbyists.

Findings from Existing Data on the Department of Defense Industrial Base

January 2, 2015 Comments off

Findings from Existing Data on the Department of Defense Industrial Base
Source: RAND Corporation

To demonstrate the potential of existing data to provide information on the defense supplier base, the researchers conducted some illustrative analyses using, among other sources, the System for Award Management, the Federal Procurement Data System — Next Generation, the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS), and the U.S. Geological Survey. Of these, the FSRS is the most recent and its coverage of subaward dollars is expanding as older contracts expire and are replaced with ones with FSRS reporting requirements. Using these data can identify small-business participation in the supply base as well as the vulnerability of contractors and subcontractors to changes in their federal government prime contract and subcontract revenue or environmental risks. Such information can help policymakers better understand potential risks in the supply chain and better shape industrial-base policies. Adding data on natural-disaster risks can also help identify external sources of supply disruption and point to potential buffering strategies.

Does Financing Spur Small Business Productivity?

December 19, 2014 Comments off

Does Financing Spur Small Business Productivity?
Source: Cato Institute

cess to adequate financing is an important issue for firms, particularly younger and smaller ones. Given the role these firms play in the process of creative destruction, alleviating financial constraints for start-ups and small businesses is an important concern around the world. More recently, the financial crisis of 2008 demonstrated the critical role of bank financing, at both the firm and economy wide levels. While prior studies have examined how financing affects entrepreneurial firm starts and closures (e.g., Black and Strahan, 2002; Kerr and Nanda, 2009), no study has directly analyzed the link between bank financing and firm productivity, particularly for smaller firms where access to financing is critical. This is important given that most start-ups appear to rely on bankdebt financing (Robb and Robinson, 2013).

Determining the relation between bank financing and firm productivity is difficult because of the possibility of reverse causality. A positive correlation between bank financing and productivity might mean that more productive firms seek additional bank financing, or that increased access to bank financing enhances productivity. Yet another possibility is that unobserved factors affect both access to financing and productivity.

Our research addresses reverse causality by exploiting an exogenous shift in firms’ access to bank financing due to deregulation of interstate bank branching. During the 1990s, states began allowing out-of-state banks to set up and acquire local branches. This increased interstate banking and thus allowed greater access to financing for firms. Consistent with prior literature, we show that deregulations were not driven by prior productivity of firms. The key question is whether this increased access to cheaper financing is dissipated by firms taking on unproductive or less productive pet projects or whether it increases firms’ ability to undertake additional productive projects.

New From the GAO

December 12, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. DOE and NNSA Project Management: Analysis of Alternatives Could Be Improved by Incorporating Best Practices. GAO-15-37, December 11.
http://www.gao.gov/products/GAO-15-37
Highlights – http://www.gao.gov/assets/670/667405.pdf

2. Nuclear Weapons: DOD’s Plan for Implementing Nuclear Reductions Generally Addresses Statutory Requirements but Lacks Some Detail. GAO-15-89R, December 11.
http://www.gao.gov/products/GAO-15-89R

3. Small Business Credit Programs: Treasury Continues to Enhance Performance Measurement and Evaluation but Could Better Communicate and Update Results. GAO-15-105, December 11.
http://www.gao.gov/products/GAO-15-105
Highlights – http://www.gao.gov/assets/670/667449.pdf

4. Flood Insurance: Forgone Premiums Cannot Be Measured and FEMA Should Validate and Monitor Data System Changes. GAO-15-111, December 11.
http://www.gao.gov/products/GAO-15-111
Highlights – http://www.gao.gov/assets/670/667412.pdf

5. DOD Contract Services: Improved Planning and Implementation of Fiscal Controls Needed. GAO-15-115, December 11.
http://www.gao.gov/products/GAO-15-115
Highlights – http://www.gao.gov/assets/670/667431.pdf

6. Federal Subcontracting: Linking Small Business Subcontractors to Prime Contracts Is Not Feasible Using Current Systems. GAO-15-116, December 11.
http://www.gao.gov/products/GAO-15-116
Highlights – http://www.gao.gov/assets/670/667409.pdf

7. Professional Misconduct: DOJ Could Strengthen Procedures for Disciplining Its Attorneys. GAO-15-156, December 11.
http://www.gao.gov/products/GAO-15-156
Highlights – http://www.gao.gov/assets/670/667402.pdf

Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions

December 12, 2014 Comments off

Finance and Social Responsibility in the Informal Economy: Institutional Voids, Globalization and Microfinance Institutions
Source: Social Science Research Network

We examine the heterogeneous effects of globalization on the interest rate setting by microfinance institutions (MFIs) around the world. We consider MFIs as a mechanism to overcome the institutional void of credit for small entrepreneurs in developing and emerging economies. Using a large global panel of MFIs from 119 countries, we find that social globalization that embraces egalitarian institutions on average reduces MFIs’ interest rates. In contrast, economic globalization that embraces neoliberal institutions on average increases MFIs’ interest rates. Moreover, the proportions of female borrowers and of poorer borrowers negatively moderate the relationship between social globalization and MFI interest rate, and positively moderate the relationship between economic globalization and MFI interest rate. This paper contributes to understanding how globalization processes can both ameliorate and exacerbate challenges of institutional voids in emerging and developing economies.

Canada — Taking the “temporary” out of the TFW program

December 10, 2014 Comments off

Taking the “temporary” out of the TFW program
Source: Canadian Federation of Independent Business

In a new report released today, the Canadian Federation of Independent Business (CFIB) calls for the Temporary Foreign Worker Program (TFWP) to be replaced with a stronger solution to address permanent labour shortages. Geared towards entry-level workers, CFIB’s proposed Introduction to Canada Visa would simultaneously address critical shortages for small businesses while providing a clear path to permanent residence for foreign workers.

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