11/30/2009 9:00:00 AM By
After the crazy financial environment of the last year, consumer finance (or household financial usage) surveys appear to be increasing in popularity or frequency. The Federal Reserve Board of Governors made a really astute decision to refield their popular Survey of Consumer Finance, last done in 2007, but not to implement a new 2009 cohort but rather to go back to their respondents from 2007 and collected panel data on the finances of these households. And apparently, they have added in some logic to their questionnaire such that if a respondent was a business owner in 2007 but not in 2009 they will ask what happened to that business. This holds great potential in studing entrepreneurial households. Unfortunately, the sample sizes here are so small that it the utility of the data could be limited depending on incidence rates.
Additionally, the World Bank is considering some expanded work in this area that if approved could be quite exciting. Also from the World Bank, a recent paper highlights some methodological issues about collecting data on financial service usage:
11/24/2009 9:00:00 AM By
I have enjoyed watching reactions to Josh Lerner's new book - Boulevard of Broken Dreams
- over the last few weeks from the Economist
, the New York Times
, and also state-level development groups
. Lerner's book, which is a part of a new Kauffman series at Princeton University Press
, and flows in large part from his experience running the Entrepreneurship Working Group at the National Bureau of Economic Research
, is an easy read, in my opinion, but one which is likely to simultaneously scare and excite policymakers. Excitement will come from having something which is so comprehensive in its global policy review, but one does get scared at reading the many things which appear can go wrong with usually well-intentioned interventions. For those not having read the book, the SSTI has a nice summary of key points
For me, Josh's book highlights two things related to measurement:
- Knowing What to Measure is Hard. In most cases, the items which Josh highlights as keys to success or failure are not things which I would have initially thought to measure about a specific intervention although I think I'd have a better idea what to measure about a venture capital-focused policy. Since I am not trying to do such an assessment currently, I am focused on trying to improve data available from the federal agencies so that granular and consistent data on things like business dynamics, gazelle companies, and high-growth firms are available at the regional or subregional level in the United States. Releasing such data in a timely fashion could greatly aid regional economic development.
- Database on Policy Interventions. Tracking substantive changes to program implementations such as the many that Josh describes is too often left to oral history or chance capture. I would love to see some sort of open-source development of a database of key programmatic interventions to support entrepreneurship and/or innovation over time and major timelines, events, changes, etc. Such data would aid so much in looking for impacts but to my knowledge, no such compilation exists for scholars interested in studying policy to draw from (or add to). If anyone has ideas of data products available here or means by which such data could be collected, I would love to hear suggestions. Perhaps its possible mine things like Wikipedia in an automated fashion for some of this info?
11/18/2009 6:17:57 AM By
This morning a meeting convenes at the Treasury Department, as I understand currently, on the topic of increasing small business finance. This is a good thing. No, this is a great thing. For months we (through the leadership of Alicia Robb) have been tracking data available on small business financing in the United States and reporting that information into a project on the topic organized at the Organisation for Economic Co-operation and Development (OECD)
who has been trying to study data available in developed economies. Read the current scoreboard for the United States
But as happy as I am on this, I am very puzzled. It appears this meeting is taking place in the absence of topical experts on the subject. I can name on my fingers the people who know small business finance data in the U.S. (and internationally) and to my knowledge none of them have been invited to attend this session which is supposedly set to last six hours. We at Kauffman tried to get an invitation to support the nascent effort but had no success.
Interestingly, one of the headlines in today's New York Times is about a new Goldman Sachs program to promote small business loans and education
. This is an issue which has been building by all reports during the crisis but the data available on the topic are few. I hope that today's meeting at Treasury is the start of some leadership on the topic but I also hope any effort is somewhat transparent and brings in outside experts. The Small Business Administration had one expert in financial data, Charles Ou, and he retired this last year. Tapping into the insights of people like William Kerr and Ramana Nanda of Harvard who have a new scoping paper on financing entrepreneurship
will be important to collecting data which is helpful to policy and understanding of the topic, not just descriptive.
11/12/2009 9:00:00 AM By
Traci Mach and Arthur Kennickell at the Federal Reserve Board of Governors were nice enough to share with me a memo documenting the final questions
that will be used on the 2010 Survey of Consumer Finance
related to their expanded coverage of households with members who business owners. I've posted before on this topic, specifically pointing to a 2008 paper
that Traci and Arthur did on this subject and a more recent report after visiting Traci and Arthur
which is what actually led to this memo. Their memo is a nice complement to conference presentation from 2008 and gives us insight into some areas where their cognitive testing of the questions led to changes in proposed questions.
While their memo
speaks for itself, this is a blog and as such I can't resist sharing some of my reactions:
- Equity shares. Traci and Arthur highlight how difficult it is to determine equity allocations among different owners of a business, particularly when there are multiple owners within a household. We experienced similar difficulties when designing the Kauffman Firm Survey. Most business surveys don't get into equity financing, choosing to stay in the easier to ask about debt financing. While I think the approach put forth for the SCF makes sense and what we did in the Kauffman Firm Survey works well, equity is something which is often less delineated than most of us would expect. Who owns what, exactly, may not be fully articulated.
- Sales vs. income. Traci and Arthur discuss their surprise in how difficult it was for some small businesses to answer sales vs. income questions. This doesn't surprise me at all and is what has made me leery of business questions which try to be too simplistic. It's also a reminder to entrepreneurship scholars conducting their own survey work that they should be careful to ensure good definitions, clear questions, and keep things simple and detailed to ensure the responses they get are on the intended subjects.
- Collateralization and net worth of business. I've never seen a survey that asked about actual collateral used on loans or net worth of a business. I'll be very curious to see if they can get good responses here. I would be much more comfortable with getting some sort of administrative source of data for the collateralization question rather than a survey response but there are not great sources available here. I saw one source which Dun and Bradsteet reportedly sells but it was unclear to me on review if the source was reliable. And on the net worth of the business, this could be a potentially great question if answerable. I know we've been requested to add something similar to the Kauffman Firm Survey in the past but the whole idea of asking respondents a current value of their business if sold seems quite difficult conceptually.
- Really of use? There are some questions included here I just doubt will be useful, specifically about the sources of start-up capital and current year financing. Given the amount of space that the SCF has here, I know why the questions are as short as they are but really what use will the data be to know that the business owners used a certain source of capital without any info on amounts?
The SCF has tried admirably to expand into covering more on business ownership but the U.S. needs a separate survey focused on business financing to adequately address this complicated but important topic.
10/9/2009 8:58:52 AM By
Although there is little doubt that households have undergone incredible changes to their spending, investment, and other activities as a result of the current recession, data on this topic are not readily available. A new HNW/Forbes Wealth Pulse survey
gives insights into a hard-to-reach population but one of great interest - high-net worth individuals. It finds respondents who expect a recovery soon and see opportunity in the current economy to grow investments. Interestingly, it finds many millionaires are cutting back on charitable giving (28 percent) but even more (51 percent) plan to give as much or more to charity.
The Survey of Consumer Finance
(SCF), the Federal Reserve's seminal research product in this area, is only available through 2007 (and for every three-year period before that for several cycles). But, there is hope that in mid-2010 the Fed will have some information available on consumer finance in 2009. What the Fed has done, to the best of my current understanding, is to refield the SCF in 2009 on the same sample that it used in 2007. As such, they will be creating a short longitudinal panel of households which should allow for in-depth analysis of the effects of the current recession. This was a brilliant methodological move in my estimation but one that really should be a part of the ongoing design of the program. The next wave of the SCF will collect data on a new sample in 2010, and I believe in that wave forward, they plan to implement an intentional longitudinal design. This should prove very useful to researchers and policymakers in this area as we can actually examine the factors which appear to drive change at the microlevel. Incidentally, the SCF has an oversample of wealthy households (who are disproportionately households which own businesses) so some of what HNW/Forbes attempted to capture here will be possible to analyze in a more robust sample through the SCF.
9/14/2009 7:42:38 AM By
The World Bank's Doing Business has published data for 2010
. This effort "investigating the regulations that enhance business activity and those that constrain it" continues to be one of the most successful efforts to collect benchmark data and drive policy changes. Additionally, as a recent Economist article notes
, these indicators are now widely used in academic and policy research. Also perhaps of interest is a more in-depth report from late last year on paying taxes across countries
I would highlight an upcoming conference that Kauffman and the World Bank are sponsoring looking entrepreneurship and growth.
Conference on Entrepreneurship and Growth
November 19-20, 2009 - World Bank, Washington DC
Jointly sponsored by the Development Research Group and the
Investment Climate Advisory Services of the World Bank Group, and the
Ewing Marion Kauffman Foundation
Entrepreneurship is important for the continued dynamism of the modern economy and economic growth. The aim of this conference is to explore government regulations and reforms, private sector initiatives, and financial sector developments that affect the creation of new firms, the average size of firms, and the dynamism of incumbent firms.
Read the Agenda: http://econ.worldbank.org/conferences/entrepreneurship
RSVP: Email Agnes Yaptenco
at the World Bank to arrange a visitor's pass. Please indicate which dates you plan to attend. Seating is limited.
8/14/2009 7:37:43 AM By
A new deal announced in early August
between National Venture Capital Association and Cambridge Associates for return data in venture capital (VC) world. I am not an expert in VC data so I don't know the full ramifications of this but details
should be of interest to many scholars. It seems that this will broaden data available rather than have a significant impact on some of the more establish VC sources:
NVCA adds this benchmarking initiative to relationships with Pricewaterhousecoopers for the MoneyTree survey and with Thomson Reuters for quarterly exit and fundraising data. Cambridge will continue to offer non-marketable alternative assets benchmark information and serve the institutional investor and private client market.
8/10/2009 5:46:35 PM By
An article from the World Bank on measuring investor and consumer confidence:
This is not entrepreneurship or innovation but many scholars in our area look at topics which are touched by this topic and I can foresee that increasing.
7/22/2009 5:39:22 PM By
The World Wide Web Consortium and XBRL International are holding a "Workshop on Improving Access to Financial Data on the Web" in Arlington, Virginia, on October 5-6, 2009, to discuss an important concept in finance research - meta tagging. XBRL has been around for several years and has been adopted fairly widely according to the organizers but progress remains to be seen. I first heard of XBRL when working to support or President on the Department of Commerce's Measuring Innovation in the 21st Century Economy - Advisory Committee
. Read the full conference call
and extract goals of the workshop:
The goal of this workshop is to identify opportunities and challenges for interactive access to financial data expressed in XBRL and related languages, and the broader opportunities for semantic technologies. What are the use cases? Who are the stakeholders? What are the potential roadblocks and how can they be addressed? How can new applications be created based upon integrating XBRL with other sources of information?
The main outcome of the workshop will be the publication of a report that will serve as a guide for further work in both W3C and XBRL International.
7/21/2009 12:59:34 PM By
Reports out this morning from the official monitoring the Troubled Asset Relied Program for the U.S. Congress
highlight the difficulty of tracking the success of this program because of a lack of data. These reports reminded me of a recent presentation I sat through from Statistics Canada discussing two of their programs for monitoring lending to small businesses in Canada. A bit more background on the two projects as I understand them.
- Survey on Financing of Small and Medium Enterprises. Completed every three years, with most recent data available from 2007, this survey gets detailed business financing data from establishments. You can read much more on the details of sampling, etc.
- Survey of Suppliers of Business Financing. Completed on roughly the same cycle but gathering data from banks instead of businesses, this survey gets aggregate information on bank portfolios. Read more on the details.
What I found most interesting about hearing Statistics Canada talk about both collection efforts back-to-back was the informal comments that were given about the merits of collecting data from banks rather than businesses. As I remember, the comments basically alluded to the difficult time that Statistics Canada has of getting banks to provide data for their survey, even though the survey is mandatory under Canadian statutes. On the survey of businesses, they have a much easier time of getting the data, relatively, and have felt they are able to do more detailed manipulations with the data, providing richer outputs, and helping that program to have more stable funding support.
What I read into these stories is that banks hold a great deal of power in deciding who gets what information, even when the world is watching closely or statutes compel them to participate.