The Financial Consequences of Customer Satisfaction: Evidence from Yelp Ratings and SBA Loans

Huang, Ruidi

doi:10.2139/ssrn.3064343

Cited by 5 publications

(2 citation statements)

References 35 publications

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“…According to the SBA, small businesses in the US generate about 50 percent of the US gross domestic product (GDP). Small businesses have relatively limited access to public equity and debt markets but represent more than 95 percent of all firms (Huang, 2022). In this section, we turn our attention to how QE affects financial access through this important government programme and use SBA loans data from 1 October 2008 to 20 September 2017 to fully examine the influence of QE on borrowing firms from the entire credit spectrum.…”

Section: Small Business Loansmentioning

confidence: 99%

Did quantitative easing reduce the borrowing costs of firms? The risk‐taking channel

Wang

Shen

2023

Accounting & Finance

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This paper examines the effect of the Federal Reserve's quantitative easing (QE) on the cost of bank loans and documents large heterogeneous effects across different firms. In QE1, the average loan spread is 22.7 percent lower compared to the non‐QE period. This effect falls in QE2 and OT and then rises in QE3 and the tapering period. The rates of riskier loans are restrained more than less risky loans during QEs as banks take more risks by offering lower rates to attract risky borrowers. The Fed mortgage‐backed securities purchases have a larger impact in narrowing the borrowing cost difference between riskier and safer loans than the Fed Treasury purchases. Our results are robust to borrower, year‐quarter and bank fixed effects. Overall, our findings support that the risk‐taking channel of QE plays a significant role in the corporate bank loan market.

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Section: Small Business Loansmentioning

confidence: 99%

Did quantitative easing reduce the borrowing costs of firms? The risk‐taking channel

Wang

Shen

2023

Accounting & Finance

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“…Related studies show that information available online, including customer ratings (Huang (2018)), employee ratings (Green, Huang, Wen, and Zhou (2019), Edmans (2011)) and opinions expressed in social media (Chen, De, Hu, and Hwang (2014)) convey value-relevant information and predict stock returns. The closest article to ours is Huang (2020), who uses loan-level data and shows that online ratings affect the probability of obtaining bank loans and their cost. However, the two papers can be considered complementary as they focus on different outcomes and employ different data sets.…”

Section: Introductionmentioning

confidence: 99%

Online Reputation and Debt Capacity

Derrien¹,

Garel²,

Petit-Romec³

et al. 2023

J. Financ. Quant. Anal.

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We explore the effects of online customer ratings on financial policy. Using a large sample of Parisian restaurants, we find a positive and economically significant relationship between customer ratings and restaurant debt. We use the locally exogenous variations in customer ratings resulting from the rounding of scores in regression discontinuity tests to establish causality. Favorable online ratings reduce cash flow risk and increase resilience to demand shocks. Consistent with the view that good online ratings increase the debt capacity of restaurants and their growth opportunities, restaurants with good ratings use their extra debt to invest in tangible assets.

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Industry Specialization and Small Business Lending

Pattison

2023

Journal of Banking & Finance

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The Financial Consequences of Customer Satisfaction: Evidence from Yelp Ratings and SBA Loans

Cited by 5 publications

References 35 publications

Did quantitative easing reduce the borrowing costs of firms? The risk‐taking channel

Did quantitative easing reduce the borrowing costs of firms? The risk‐taking channel

Online Reputation and Debt Capacity

Industry Specialization and Small Business Lending

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