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Bank Loans as Predictors of Small Business Start-Up Survival
Bank Loans as Predictors of Small Business Start-Up Survival
Working Paper Number: CES-99-04
Abstract
This paper reports an investigation of the validity and reliability of a set of predictors of the survival of small, start-up companies. Having a bank loan was a significant positive predictor of survival . The use of the model as a predictor of survival was investigated on an hold-out sample. One group of companies in the hold-out sample had high predicted probabilities of survival, in spite of note having bank loans. This group had a survival rate that was slightly better than that of companies in the hold-out sample that had obtained bank loans. The group with high survival rate, but without bank loans, made greater use of other forms of loans. The group of companies with a high survival rate, but without bank loans, accounted for 22% of the hold-out.
Page Last Revised - October 8, 2021
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