Loan Terms and Loan Repayment Performance: The Experience with Minority Small Businesses

Abstract

The purpose of this paper is to report the results of a study which examines the relationship between the structural characteristics of loans to minority small businesses and loan performance. The study represents an extension of research to the analysis of small business loan performance [2, 5, 7, 14]. As such it provides another perspective to understanding the performance of such loans by considering the relationships that exist between loan characteristics and loan performance. In particular, the finding regarding the relationship between the amount of the loan and loan performance provides important additional evidence relevant to a debate in the literature between Edelstein [5, 6] and Bates and Hester [3] about the effect of the loan size variable.

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