Modeling Funding Dynamics in the U.S. Microlending Sector
An Empirical Analysis of Types of Business and Investment Amounts
Abstract
Microlending market in the United States faces structural challenges that differ it with the microfinance situation in other parts of the world, such as a relatively small pool of microenterprises, high operation costs, and the existence of strict regulation, which hinders institutional achievement and investor returns. Such circumstances make it difficult to ensure the sustainability and effectiveness of community development funds, and it is critical to understand the differences in the flow of funding in different types of investments and capital distributions. This study examines how the volume of funding activity affects the volume of QLICI investments and QALICB business categories, namely Real Estate (RE) and Non-Real Estate (NRE) to identify general trends in federal behavior regarding community development investment. The study applies a quantitative research design based on secondary data, which is gathered by the U.S. Department of the Treasury (2001-2022), and is supported by cross-study checks and series validity tests, as well as the inclusion of peer-reviewed materials. The data was analyzed in Stata 17.0, with an ordinary least squares (OLS) regression model to determine the way that QLICI Amount and QALICB Type moderate the number of funding per year. The post-estimation tests such as an Actual vs Predicted Funding plot gave information on the accuracy of models and linearity of the observed associations. The results provide systematic knowledge on the way investment size and sector typology shape federal funding patterns, which boosts the evaluation of community development financing and makes policy choices to strengthen investment equity and program effectiveness.
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