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Financing small business creation: The case of Chinese and Korean immigrant entrepreneurs

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  • Bates, Timothy

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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  • Bates, Timothy, 1997. "Financing small business creation: The case of Chinese and Korean immigrant entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(2), pages 109-124, March.
    • Handle: RePEc:eee:jbvent:v:12:y:1997:i:2:p:109-124
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    References listed on IDEAS

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    1. Timothy Bates & Robert McGuckin, 1990. "The Characteristics of Business Owners Data Base," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 736-751.
    2. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-559, November.
    3. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    4. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    5. Frank Fratoe, 1988. "Social capital of black business owners," The Review of Black Political Economy, Springer;National Economic Association, vol. 16(4), pages 33-50, March.
    6. Frank Fratoe, 1986. "A sociological analysis of minority business," The Review of Black Political Economy, Springer;National Economic Association, vol. 15(2), pages 5-29, September.
    7. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    8. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
    9. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
    10. Timothy Bates & William D. Bradford, 1992. "Factors Affecting New Firm Success and Their Use in Venture Capital Financing," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 2(1), pages 23-38, Fall.
    11. Alfred R Nucci, 1992. "The Characteristics of Business Owners Database," Working Papers 92-7, Center for Economic Studies, U.S. Census Bureau.
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