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Do Equally Owned Small Businesses Have Equal Access to Credit?

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  • Grace Kim

Abstract

Previous research in small-business financing has generally ignored those businesses owned equally by males and females. The rationale has been that such businesses share the characteristics of both types of owners and would confound any gender-based differences. This paper presents an empirical study in which the credit access experiences of equally owned small businesses are compared to those of their female- and male-owned entrepreneurial counterparts. Various measures of credit constraints are introduced that suggest that equally owned businesses often do experience larger constraints than male-owned businesses and smaller constraints than female-owned businesses, when all credit applicants are considered. However, the results are more mixed in comparisons of successful applicants’ constraints. A different approach from that of existing research is then used to study exactly how equally owned small businesses’ experiences are unique, rather than merely whether they differ from those of their counterparts. The evidence indicates that different factors are determining the credit application outcomes of all three ownership groups. Where similar determinants are found, equally owned businesses are influenced in a manner more similar to male-owned small businesses. The results show that equally owned small businesses’ credit access experience is not equally balanced between those of their counterparts. Copyright Springer 2006

Suggested Citation

  • Grace Kim, 2006. "Do Equally Owned Small Businesses Have Equal Access to Credit?," Small Business Economics, Springer, vol. 27(4), pages 369-386, December.
  • Handle: RePEc:kap:sbusec:v:27:y:2006:i:4:p:369-386
    DOI: 10.1007/s11187-005-2558-7
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    File URL: http://hdl.handle.net/10.1007/s11187-005-2558-7
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    References listed on IDEAS

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    1. Ken Cavalluzzo & John Wolken, 2005. "Small Business Loan Turndowns, Personal Wealth, and Discrimination," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2153-2178, November.
    2. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
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    Citations

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    Cited by:

    1. Peter van der Zwan, 2014. "Bank loan application success by SMEs: the role of ownership structure and innovation," Scales Research Reports H201404, EIM Business and Policy Research.
    2. Morgan, Horatio M., 2013. "Equity-based Financial Slack and New Venture Performance: Evidence from matched single-founder ventures," MPRA Paper 50291, University Library of Munich, Germany.
    3. Gabriel, Cle-Anne, 2016. "What is challenging renewable energy entrepreneurs in developing countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 362-371.
    4. Canton, E.J.F. & Grilo, I. & Monteagudo, J. & van der Zwan, P.W., 2012. "Perceived credit constraints in the European Union," ERIM Report Series Research in Management ERS-2010-001-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. Erik Canton & Isabel Grilo & Josefa Monteagudo & Peter Zwan, 2013. "Perceived credit constraints in the European Union," Small Business Economics, Springer, vol. 41(3), pages 701-715, October.
    6. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces," MPRA Paper 52327, University Library of Munich, Germany.
    7. Morgan, Horatio M., 2013. "Equity-based Financial Slack and New Venture Performance: Evidence from matched single-founder ventures," MPRA Paper 50325, University Library of Munich, Germany.
    8. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Small Business Lending: Evidence from Canada," MPRA Paper 50813, University Library of Munich, Germany.
    9. Saridakis, George & Marlow, Susan & Storey, David J., 2014. "Do different factors explain male and female self-employment rates?," Journal of Business Venturing, Elsevier, vol. 29(3), pages 345-362.

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