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Discrimination In The Small Business Credit Market
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Book Synopsis Discrimination in the Small Business Credit Market by : David G. Blanchflower
Download or read book Discrimination in the Small Business Credit Market written by David G. Blanchflower and published by . This book was released on 1998 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses data from the 1993 National Survey of Small Business Finances to determine the extent to which minority-owned small businesses face constraints in the credit market beyond those faced by white-owned small businesses. First, we present qualitative evidence indicating that black- and white-owned firms report similar concerns about the factors that may affect their businesses except that blacks are far more likely to report problems with credit availability. Second, we conduct an econometric analysis of loan denial probabilities by race and find that black-owned small businesses are almost three times more likely to have a loan application denied. Even after controlling for the differences in credit-worthiness and other factors that exist between black- and white-owned firms, blacks are still about twice as likely to be denied credit. A series of specification checks indicates that this gap is unlikely to be largely attributed to omitted variable bias. Third, we conduct a similar analysis regarding interest rates charged to approved loans and find black-owned firms pay higher interest rates as well. Finally, even these results are likely to understate differences in credit access because many potential black-owned firms are not in operation due to the lack of credit and those in business may be too afraid to apply. These results indicate that the racial disparity in credit availability is likely caused by discrimination
Book Synopsis Market Structure and Discrimination by : Ken S. Cavalluzzo
Download or read book Market Structure and Discrimination written by Ken S. Cavalluzzo and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines bank market structure to draw inferences concerning the role of discrimination in credit markets for small businesses. We analyze credit application and denial rates, loans outstanding, and interest rates across demographic groups. This set of variables, in combination with information on local bank market structure, helps us distinguish among borrower preferences, lender tastes, and inadequate lender information as likely causes of differences in credit market experiences of small business operators from distinct demographic groups. We find that white men and women can expect similar treatment in credit markets, with some benefits to female- owned firms located in concentrated banking markets. Minorities, by contrast, fare worse than whites. Moreover, by appealing to Becker's (1957) classic theories, we find some clear evidence to support the view that prejudicial discrimination is at least partly to blame.
Book Synopsis Small Firm Credit Market Discrimination, SBA-Guaranteed Lending, and Local Market Economic Performance by : Ben R. Craig
Download or read book Small Firm Credit Market Discrimination, SBA-Guaranteed Lending, and Local Market Economic Performance written by Ben R. Craig and published by . This book was released on 2007 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically test whether SBA-guaranteed lending has a greater impact on economic performance in markets with a high percentage of potential minority small businesses. This hypothesis is predicated on priors related to three overlapping assumptions. These three assumptions are: (1) The classic type of credit rationing developed in the seminal paper by Stiglitz and Weiss (1981) is more likely to occur in markets with a higher per capita percentage of minority small businesses because such markets are more likely to have more severe information asymmetry problems, (2) SBA-guaranteed lending is likely to reduce these credit rationing problems - thus improving the level of development of the local financial market, and (3) increased local financial market development helps to lubricate the wheels of economic performance (Rajan and Zingales, 1998). Using local labor market employment rates as our measure of economic performance, we find evidence consistent with this proposition. In particular, we find a positive and significant impact on the average annual level of employment in a local market of SBA-guaranteed lending in that local market. This impact is 200 percent larger in markets with a high percentage of potential minority small businesses. This result has important implications for public policy in general and SBA-guaranteed lending in particular.
Book Synopsis Competition, Small Business Financing, and Discrimination by : Ken S. Cavalluzzo
Download or read book Competition, Small Business Financing, and Discrimination written by Ken S. Cavalluzzo and published by . This book was released on 2001 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: A large body of literature investigates discrimination in home mortgage markets. In contrast, little is known about variation in access to credit across demographic groups for small businesses. This paper examines some of the factors that influence differences in small business credit market experiences across demographic groups. We analyze credit applications, loan denials, and interest rates paid across gender, race and ethnicity of small business owners. In addition, we analyze data gathered from small business owners who said they did not apply for credit because they believed that their application would have been turned down. This set of analyses, in combination with important new information on the personal credit history of the principal owner, the business credit history of the firm, a rich set of additional explanatory variables, and information on the competitiveness of local banking markets, helps us to understand better the sources of observed differentials in the credit market experiences of small business operators across demographic groups. The analyses reveal substantial unexplained differences in denial rates between African American and white-male owned firms. Moreover, consistent with Becker?s classic theories (1957), we find evidence that the level of lender market competition in the firm?s local banking market mitigates these differences.
Book Synopsis Small Business Loan Turndowns, Personal Wealth and Discrimination by : Ken Cavalluzzo
Download or read book Small Business Loan Turndowns, Personal Wealth and Discrimination written by Ken Cavalluzzo and published by . This book was released on 2002 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Evaluating Statistical Models of Mortgage Lending Discrimination by : Mitchell Stengel
Download or read book Evaluating Statistical Models of Mortgage Lending Discrimination written by Mitchell Stengel and published by . This book was released on 1995 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Competition, Small Business Financing, and Discrimination by : Ken Cavalluzzo
Download or read book Competition, Small Business Financing, and Discrimination written by Ken Cavalluzzo and published by . This book was released on 1999 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Racial Disparities in Access to Small Business Credit by : Sabrina T. Howell
Download or read book Racial Disparities in Access to Small Business Credit written by Sabrina T. Howell and published by . This book was released on 2021 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore the sources of racial disparities in small business lending by studying the $806 billion Paycheck Protection Program (PPP), which was designed to support small business jobs during the COVID-19 pandemic. PPP loans were administered by private lenders but federally guaranteed, largely eliminating unobservable credit risk as a factor in explaining differential lending by race. We document that even after controlling for a firm's zip code, industry, loan size, PPP approval date, and other characteristics, Black-owned businesses were 12.1 percentage points (70% of the mean) more likely to obtain their PPP loan from a fintech lender than a traditional bank. Among conventional lenders, smaller banks were much less likely to lend to Black-owned firms, while the Top-4 banks exhibited little to no disparity after including controls. We use novel data to show that the disparity is not primarily explained by differences in pre-existing bank or credit relationships, firm financial positions, fintech affinity, borrower application behavior, or racial differences in rates of fraudulent PPP applications. In contrast, we document that Black-owned businesses' higher rate of borrowing from fintechs compared to smaller banks is particularly large in places with high anti-Black racial animus, pointing to a potential role for discrimination in explaining some of the racial disparities in small business lending. We find evidence that when small banks automate their lending processes, and thus reduce human involvement in the loan origination process, their rate of PPP lending to Black-owned businesses increases, with larger effects in places with more racial animus.
Book Synopsis Is There Ethnic Discrimination in the UK Market for Small Business Credit? by : Stuart Fraser
Download or read book Is There Ethnic Discrimination in the UK Market for Small Business Credit? written by Stuart Fraser and published by . This book was released on 2008 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The State Small Business Credit Initiative (SSBCI) by : Marcus Powell
Download or read book The State Small Business Credit Initiative (SSBCI) written by Marcus Powell and published by Nova Science Publishers. This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The SSBCI provides funding to states, territories, and eligible municipalities to expand existing or to create new state small business investment programs, including state capital access programs, collateral support programs, loan participation programs, loan guarantee programs, and venture capital programs. This book examines the SSBCI and its implementation, including Treasury's response to initial program audits conducted by the U.S. Government Accountability Office and Treasury's Office of Inspector General. These audits suggested that SSBCI participants were generally complying with the statute's requirements, but that some compliance problems existed, in that, the Treasury's oversight of the program could be improved; and performance measures were needed to assess the program's efficacy.
Book Synopsis Decomposing Racial and Ethnic Differences in Small Business Lending by : Naranchimeg Mijid
Download or read book Decomposing Racial and Ethnic Differences in Small Business Lending written by Naranchimeg Mijid and published by . This book was released on 2014 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we use the Blinder-Oaxaca method for nonlinear models to decompose observed differences in credit rationing of small businesses between white- and minority-owned firms in the USA. We utilize a representative dataset of small businesses from the Survey of Small Business Finances between 1987 and 2003. Our results show that minority owners, on average, have about a 24 percentage points higher loan denial rate than white-owned firms and about three quarters of the difference is attributed to discrimination in bank lending. Although the difference in the probability of getting a smaller loan than requested is only 5 percentage points, this difference is almost entirely attributed to discrimination.
Author :United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Financial Institutions Supervision, Regulation, and Deposit Insurance Publisher : ISBN 13 : Total Pages :330 pages Book Rating :4.F/5 ( download)
Book Synopsis Availability of Credit to Minority-owned Small Businesses by : United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Financial Institutions Supervision, Regulation, and Deposit Insurance
Download or read book Availability of Credit to Minority-owned Small Businesses written by United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Financial Institutions Supervision, Regulation, and Deposit Insurance and published by . This book was released on 1994 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt: Distributed to some depository libraries in microfiche.
Book Synopsis Borrowing Challenges for Minorities by : Jeremie Bertrand
Download or read book Borrowing Challenges for Minorities written by Jeremie Bertrand and published by . This book was released on 2016 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Can relationship-lending technology be used to overcome discrimination, as the Allport's (1954) contact hypothesis suggests? Or should minorities stay away from the bank? Using a sample of SMEs from the Survey of Small Business Finances 2003, this article shows that though relationship-lending technology generally reduces the spread and probability of the need to provide collateral for a loan, use of such technology actually leads to greater discrimination against minorities. Asians are the most negatively affected by this effect, followed by Afro-Americans and Hispanics. However, this effect occurs only when the length of the relationship is short; it tends to disappear when relationships are longer. With regard to the area in which a firm is located, there is less discrimination in areas with high minority population rates than in areas with low minority population rates. These results are robust with regard to the self-selection problem.
Book Synopsis Entrepreneurial Borrowing by : Stuart Fraser
Download or read book Entrepreneurial Borrowing written by Stuart Fraser and published by . This book was released on 2019-12-11 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: Entrepreneurial Borrowing: Do Entrepreneurs Seek and Receive Enough Credit? reviews the extant literature on entrepreneurial borrowing and provides insights into some of the key concepts and findings in the literature. The term 'entrepreneurial borrowing' is used as shorthand for 'borrowing by Small and Medium Sized Enterprises (SMEs)'. The emphasis on the term 'borrowing' as opposed to 'lending' indicates there is a particular interest in exploring issues related to the demand for credit. In this respect, issues of entrepreneurial cognition and cognitive biases, along with related insights from the behavioral finance literature, receive due attention insofar as they may affect entrepreneurs' borrowing decisions. Finally, one cannot review this literature without examining the other (supply) side of the equation (that is, 'banks' and 'lending' to SMEs).
Book Synopsis Full Committee Hearing on Small Business Participation in the Federal Procurement Marketplace by : United States. Congress. House. Committee on Small Business
Download or read book Full Committee Hearing on Small Business Participation in the Federal Procurement Marketplace written by United States. Congress. House. Committee on Small Business and published by . This book was released on 2010 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Mortgage Lending, Racial Discrimination, and Federal Policy by : John M. Goering
Download or read book Mortgage Lending, Racial Discrimination, and Federal Policy written by John M. Goering and published by The Urban Insitute. This book was released on 1996 with total page 776 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether or not there is discrimination in the mortgage lending market is one of the most extensively debated issues in the civil rights arena. Because many early studies were flawed and the results misinterpreted on both sides of the debate, there is little agreement as to the next essential steps in either research or enforcement. This comprehensive volume seeks to clarify the debate by including rigorous review of fair lending research, applied projects, and enforcement activities to date, as well as recommendations for research needed to resolve unanswered questions. The intent of the authors is to help the housing industry, regulators, advocates, and the research community to better understand the issue of discrimination in an important area of American life -- the right to take out a mortgage to buy a home based on one's credit worthiness, not on one's race or ethnic group.
Book Synopsis Handbook on the Economics of Discrimination by : William M. Rodgers
Download or read book Handbook on the Economics of Discrimination written by William M. Rodgers and published by Edward Elgar Publishing. This book was released on 2009-01-01 with total page 315 pages. Available in PDF, EPUB and Kindle. Book excerpt: The papers contained in the first part of the book are particularly valuable as a primer for researchers interested in economic discrimination. On this basis alone this book is recommended for researchers seeking an overview of current techniques for assessing economic discrimination. . . The final section nicely highlights both the importance in understanding the interaction of policy and economic discrimination, and the difficulties in isolating policy effects. Education Economics Editor Rodgers has compiled a very useful book that summarizes the current state of the literature on economic discrimination. . . This reviewer learned something new and interesting in every chapter and particularly appreciated the clear survey of the age discrimination literature. . . This book will be of value to academics and to those in the legal arena. Highly recommended. J.P. Jacobsen, Choice Discrimination s dynamic nature means that no single theory, method, data or study should be relied upon to assess its magnitude, causes, or remedies. Despite some gains in our understanding, these remain active areas of debate among researchers, practitioners and policymakers. The specially commissioned papers in this volume, all by distinguished contributors, present the full range of issues related to this complex and challenging problem. Part 1 explores innovations in methods and data collection that help to provide richer descriptions of inequality. Part 2 reviews empirical evidence on discrimination that people with disabilities, older workers and gay, lesbian and bisexual individuals face. Although discrimination among these groups is not new, this Handbook shows that economists are beginning to more fully document their experiences. Part 3 presents a balanced discussion of anti-discrimination policies and the impact of affirmative action. The methods and data chapters are particularly designed to encourage researchers to utilize the new approaches and develop new data sources. Accessible and comprehensive, the Handbook is the seminal reference on the economics of discrimination for academic and professional economists, graduate students, advanced undergraduates, practitioners, policymakers, and funders of social science research.
