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Self-Reported Emotional Distress And Credit Discouragement: Racial Differences Among Individual Microentrepreneurs In Brazil

Author

Listed:
  • MARCELO PAIXÃO

    (African and African Diaspora Studies Department, The University of Texas at Austin, Gordon-White Building, 210 W 24th St, Austin, TX 78705, USA)

  • IRENE ROSSETTO

    (Population Research Center, The University of Texas at Austin, Austin, TX, USA)

Abstract

Research has shown that credit discouragement is one of the most significant barriers deterring small businesses from accessing credit. Although credit discouragement is often associated with diminished expectations for successfully obtaining credit, the underlying causes of this phenomenon have not been explored fully. Adapting Loury’s (2021) feedback effect theory to the credit market, this study provides insights into the effect of race and emotional distress on credit discouragement among individual microentrepreneurs (IMEs) in Brazil. Using survey data collected in Rio de Janeiro and Salvador, the study confirms that Black and Brown IMEs who reported emotional distress in bank branches had a greater credit discouragement rate than those who did not. We also confirmed Brazil’s pigmentocratic pattern of inequality, with higher discouragement among Black IMEs compared to Brown and White IMEs.

Suggested Citation

  • Marcelo Paixãƒo & Irene Rossetto, 2024. "Self-Reported Emotional Distress And Credit Discouragement: Racial Differences Among Individual Microentrepreneurs In Brazil," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 29(01), pages 1-23, March.
    • Handle: RePEc:wsi:jdexxx:v:29:y:2024:i:01:n:s1084946724500031
    DOI: 10.1142/S1084946724500031
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