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Financing Small Business Creation: The Case of Chinese and Korean Immigrant Entrepreneurs

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  • Timothy Bates

Abstract

Prevailing scholarly literature misrepresents the realities of how immigrant Korean and Chinese entrepreneurs finance entry into small business. Supportive peer and community subgroups are not major sources of startup capital; the majority of all loan funds are raised by borrowing from financial institutions. The major single funding source is equity capital, which derives almost entirely from family household wealth holdings. Controlling for firm and owner traits, comparison groups of nonminority and Asian American nonimmigrant self-employed borrowers are shown to have greater access to loan sources than Korean and Chinese immigrants. High equity capital investment offsets this disadvantage. Absent rotating credit associations, and other minor debt sources, the average Korean/Chinese startup possesses substantially more financial capital than its nonminority counterparts.

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File URL: ftp://ftp2.census.gov/ces/wp/1996/CES-WP-96-09.pdf
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 96-9.

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Date of creation: Sep 1996
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Handle: RePEc:cen:wpaper:96-9

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

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References

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  1. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
  2. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
  3. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," NBER Working Papers 1942, National Bureau of Economic Research, Inc.
  4. Frank Fratoe, 1986. "A sociological analysis of minority business," The Review of Black Political Economy, Springer, Springer, vol. 15(2), pages 5-29, September.
  5. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
  6. Alfred R Nucci, 1992. "The Characteristics of Business Owners Database," Working Papers, Center for Economic Studies, U.S. Census Bureau 92-7, Center for Economic Studies, U.S. Census Bureau.
  7. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
  8. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
  9. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
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Citations

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Cited by:
  1. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers, Centre for European Policy Studies 123, Centre for European Policy Studies.
  2. Claudio Mancilla & Yancy Vaillant & Esteban Lafuente, 2011. "HOW ENTREPRENEURIALLY INFLUENTIAL SOCIAL TRAITS AFFECT BUSINESS CREATION AMONGST RURAL IMMIGRANTS: Evidence from Spain," ERSA conference papers ersa10p1464, European Regional Science Association.
  3. repec:hrs:journl::v:3:y:2011::i:2:p:179-197 is not listed on IDEAS
  4. Anderson, Alistair R. & Miller, Claire J., 2003. ""Class matters": human and social capital in the entrepreneurial process," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 32(1), pages 17-36, March.
  5. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
  6. Chand, Masud & Ghorbani, Majid, 2011. "National culture, networks and ethnic entrepreneurship: A comparison of the Indian and Chinese immigrants in the US," International Business Review, Elsevier, Elsevier, vol. 20(6), pages 593-606.
  7. repec:dgr:uvatin:2001048 is not listed on IDEAS
  8. Ebbers, Joris J. & Wijnberg, Nachoem M., 2012. "Nascent ventures competing for start-up capital: Matching reputations and investors," Journal of Business Venturing, Elsevier, vol. 27(3), pages 372-384.
  9. Neville, François & Orser, Barbara & Riding, Allan & Jung, Owen, 2014. "Do young firms owned by recent immigrants outperform other young firms?," Journal of Business Venturing, Elsevier, vol. 29(1), pages 55-71.
  10. Baycan Levent, Tuzin & Masurel, Enno & Nijkamp, Peter, 2002. "Entrepreneurial process and performance: the case of the Turkish female entrepreneurs in Amsterdam," ERSA conference papers ersa02p397, European Regional Science Association.
  11. Fairchild, Gregory B., 2008. "Residential segregation influences on the likelihood of black and white self-employment," Journal of Business Venturing, Elsevier, vol. 23(1), pages 46-74, January.
  12. Enno Masurel & Peter Nijkamp, 2002. "Motivations and Performance Conditions for Ethnic Entrepreneurship," Growth and Change, Gatton College of Business and Economics, University of Kentucky, Gatton College of Business and Economics, University of Kentucky, vol. 33(2), pages 238-260.
  13. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Working Papers, Factor Markets, Centre for European Policy Studies 122846, Factor Markets, Centre for European Policy Studies.
  14. Fairchild, Gregory B., 2010. "Intergenerational ethnic enclave influences on the likelihood of being self-employed," Journal of Business Venturing, Elsevier, vol. 25(3), pages 290-304, May.
  15. Chua, Jess H. & Chrisman, James J. & Kellermanns, Franz & Wu, Zhenyu, 2011. "Family involvement and new venture debt financing," Journal of Business Venturing, Elsevier, vol. 26(4), pages 472-488, July.
  16. Liliana Sousa, 2013. "Community Determinants Of Immigrant Self-Employment: Human Capital Spillovers And Ethnic Enclaves," Working Papers, Center for Economic Studies, U.S. Census Bureau 13-21, Center for Economic Studies, U.S. Census Bureau.
  17. repec:dgr:uvatin:2099059 is not listed on IDEAS
  18. Mediha Sahin & Alina Todiras & Peter Nijkamp, 2011. "Colourful Entrepreneurship In Dutch Cities: A Review And Analysis Of Business Performance," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 179-197, December.
  19. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, vol. 19(2), pages 261-283, March.
  20. repec:dgr:uvatin:1999059 is not listed on IDEAS
  21. Honig, Benson, 2001. "Human capital and structural upheaval: A study of manufacturing firms in the west bank," Journal of Business Venturing, Elsevier, vol. 16(6), pages 575-594, November.

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