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Competition, Small Business Financing, and Discrimination: Evidence from a New Survey

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Author Info
Ken S. Cavalluzzo (Georgetown University)
Abstract

We analyze credit applications, loan denials, and interest rates paid by small businesses across owner gender, race, and ethnicity. In addition, we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down. After controlling for a rich set of explanatory variables, including personal and business credit histories, substantial differences in denial rates between firms owned by African Americans and white males remain. Moreover, consistent with Becker's classic theories (1957), we find evidence that increases in competition in the firm's local banking market reduces these differences.

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File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?JB750404
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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 75 (2002)
Issue (Month): 4 (October)
Pages: 641-680
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ucp:jnlbus:v:75:y:2002:i:4:p:641-680

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  1. David G. Blanchflower & Chris Shadforth, 2007. "Entrepreneurship in the UK," IZA Discussion Papers 2818, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Fairlie, Robert W. & Robb, Alicia M., 2004. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," IZA Discussion Papers 1292, Institute for the Study of Labor (IZA). [Downloadable!]
  3. William E.Jackson, III & Ben R. Craig & James B. Thompson, 2006. "Does Small Business Administration guaranteed lending improve economic performance in low–income areas?," Proceedings – Community Affairs Dept. Conferences, Federal Reserve Bank of Kansas City, issue Jul, pages 55-85. [Downloadable!]
  4. Magnus Lofstrom & Chunbei Wang, 2006. "Mexican-Hispanic Self-Employment Entry: The Role of Business Start-Up Constraints," IZA Discussion Papers 2422, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Cerqueiro, G.M. & Degryse, H.A. & Ongena, S., 2007. "Rules versus Discretion in Loan Rate Setting," Discussion Paper 2007-026, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  6. Robert W. Fairlie & Christopher Woodruff, 2008. "Mexican-American Entrepreneurship," CEPR Discussion Papers 575, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  7. David G. Blanchflower, 2008. "Minority Self-Employment in the United States and the Impact of Affirmative Action Programs," NBER Working Papers 13972, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Alexander Muravyev & Dorothea Schäfer & Oleksandr Talavera, 2007. "Entrepreneurs' Gender and Financial Constraints: Evidence from International Data," Discussion Papers of DIW Berlin 706, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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  9. Wendy Edelberg, 2007. "Racial dispersion in consumer credit interest rates," Finance and Economics Discussion Series 2007-28, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  10. Lloyd Blanchard & Bo Zhao & John Yinger, 2005. "Do Credit Market Barriers Exist for Minority and Women Entrepreneurs?," Center for Policy Research Working Papers 74, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  11. David G. Blanchflower, 2007. "Entrepreneurship in the United States," IZA Discussion Papers 3130, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Robert Fairlie & Alicia Robb, 2005. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Working Papers 05-06, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  13. Ken Cavalluzzo & John Wolken, 2002. "Small business loan turndowns, personal wealth and discrimination," Finance and Economics Discussion Series 2002-35, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  14. Philipp Köllinger & Maria Minniti, 2006. "Not for Lack of Trying: American Entrepreneurship in Black and White," Discussion Papers of DIW Berlin 574, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
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