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Pieces of Eight: News Bulletins from the Eighth Federal Reserve District

There's No Business Like Small Business?

Despite a big push by bankers to make more small business loans, the percentage of such loans in bank portfolios declined by about 5 percentage points over the past three years in the Eighth Federal Reserve District.

At the end of second quarter 1996, small business loans—those for $1 million or less—made up about 56 percent of the District's business loans. "This is a healthy chunk of banks' loan portfolios," says Fed economist Michelle Clark Neely, "but not as healthy a chunk as we might have expected." The ratios declined, Neely explained, because overall business lending grew faster than small business lending. "No one is quite sure yet how to explain the trend," she said, "but one possibility is that small business loans have gotten larger over time, and, thus, are no longer counted in the small business loan category."

The decline is not a statistical fluke. Similar trends are apparent when one looks at small commercial loans collateralized by real estate: District loans under $1 million made up 62 percent of the total secured and unsecured commercial loans at the end of June, compared with 67 percent at the end of June1993. The downward trend shows up nationwide as well.

Economic Development Issues Fresh Off the Farm

About 50 economists, researchers, educators and policymakers from across the country met at the Federal Reserve Bank of St. Louis Oct. 3 to discuss a range of issues affecting America's rural communities. Presenters at the symposium called, "The Rural Economy: Heading into the 21st Century," spoke on the challenges confronting rural communities, as well as the opportunities they need to take advantage of if they are going to survive—and thrive—in the next century. Among the presenters were :

  • Nicholas Filippello of Monsanto Company, who spoke on the changes that biotechnology has brought to the field of agriculture in the last decade;
  • David Freshwater of the University of Kentucky, who spoke on the increasingly unskilled nature of the rural labor force;
  • James Rubenstein of Miami University of Ohio, who spoke on the trend of auto manufacturers to locate their plants in suburban, rather than rural, areas; and
  • Nick Walraven of the Federal Reserve System's Board of Governors, who spoke on the effect that bank mergers have had on lending in rural communities. To receive a copy of one of these papers or any of the others presented at the symposium, contact Sandra Butler of the St. Louis Fed's Research Department at (314) 444-8591.

To receive a copy of "Economic Forces Shaping the Rural Heartland," a Kansas City Fed report, call their Public Affairs Office at (816) 881-6701. To receive a copy of "Agriculture, Technology and the Economy," a Dallas Fed publication, contact their Public Affairs Office at (214) 922-5254.

District Residents Living the American Dream

Homeownership Rates, 1995

State Rate
Kentucky 71.2%
Mississippi 71.1
Indiana 71.0
Missouri 69.4
Arkansas 67.2
Tennessee 67.0
Illinois 66.4
National Average 64.7

SOURCE: U.S. Bureau of the Census

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