The Case of Minority Small Business Owners

Abstract

This academic research explores the availability of loan financing to minority-owned businesses and examines a potential relationship between the size of a loan and the characteristics of a business in the USA. It also investigates the possible impact of different characteristics and quantifiable criteria on credit loan denial across different demographic groups. Probit models are used to evaluate the potential existence of racial or ethnic discrimination in the availability and approval of credit. Regression analysis is used to assess the impact that the race of a small business owner has on the relative size of a denied loan, the size of portioned credit, or the size of the company. When other variables suspected of influencing credit approval and rationing are controlled, black-owned and Asian-owned businesses appear to be less likely to be approved for loans and more likely to experience significantly greater credit rationing than their white counterparts.

Keywords: {'name': 'Credit'}, {'name': 'ethnicity'}, {'name': 'loans'}, {'name': 'racial discrimination'}, {'name': 'small businesses'}

Authors & affiliations

Roman Bohdan
Affiliation not supplied

Elizabeth Tipton
Affiliation not supplied

Dean Kefer
Affiliation not supplied

Arsen Djatej
Affiliation not supplied

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