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The Financing of Diverse Enterprises: Evidence from the SME finance monitor

Author

Listed:
  • Sara Carter

    (Strathclyde Business School)

  • Samuel Mwaura

    (Strathclyde Business School)

Abstract

This paper contributes to our understanding of the finance issues currently facing diverse SMEs by presenting a new analysis of the SME Finance Monitor. While prior studies have contributed substantial evidence regarding the effects of either gender or ethnicity on finance outcomes, these analyses have typically focused on either women-owned or ethnic minority owned enterprises. This study considers the experiences and outcomes of both women-owned and ethnic minority-owned enterprises, including the interaction effects of ethnicity and gender. Central to this analysis is the development of a new typology of borrowers that categorises SMEs across six groups: existing borrowers; new/renewed borrowers; declined borrowers; partial borrowers; potential borrowers; and indifferent non-borrowers. Using this typology as the analytical lens enables a more granular view of the SME Finance Monitor dataset, and reveals both a broader set of potential borrowers and a wider set of antecedents of debt-avoidance than have previously been identified. As prior studies have indicated, gender effects that were notable and significant in the initial phases of the analysis were mainly dissipated when other factors, such as legal form and firm age, were considered. Analyses of ethnicity, however, suggest a different experience. While structural factors such as sector, firm size, the presence of a business plan, firm age, and legal form all impact on finance outcomes, after controlling for these structural factors the relative likelihood of borrowing success remains lower among Black and Minority Ethnic (BME) business owners as compared their White British and Irish (WBI) counterparts.

Suggested Citation

  • Sara Carter & Samuel Mwaura, 2014. "The Financing of Diverse Enterprises: Evidence from the SME finance monitor," Research Papers 0018, Enterprise Research Centre.
    • Handle: RePEc:enr:rpaper:0018
    as

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    References listed on IDEAS

    as
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    Keywords

    0018;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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