Open AccessThe Case of Minority Small Business Owners
Author(s) -
Roman Bohdan,
Elizabeth Tipton,
Dean Kiefer,
Arsen Djatej
Publication year - 2014
Publication title -
international journal of finance and banking studies
Language(s) - English
Resource type - Journals
ISSN - 2147-4486
DOI - 10.20525/ijfbs.v3i3.185
Subject(s) - loan , probit model , small business , credit rationing , probit , business , denial , credit history , race (biology) , actuarial science , finance , economics , interest rate , psychology , botany , psychoanalysis , econometrics , biology
This academic research explores the availability of loan financing to minority-owned businesses and examines a potential relationship between the size of a loan and the characteristics of a business in the USA. It also investigates the possible impact of different characteristics and quantifiable criteria on credit loan denial across different demographic groups. Probit models are used to evaluate the potential existence of racial or ethnic discrimination in the availability and approval of credit. Regression analysis is used to assess the impact that the race of a small business owner has on the relative size of a denied loan, the size of portioned credit, or the size of the company. When other variables suspected of influencing credit approval and rationing are controlled, black-owned and Asian-owned businesses appear to be less likely to be approved for loans and more likely to experience significantly greater credit rationing than their white counterparts.