Market Structure and Discrimination: The Case of Small Businesses

Posted: 10 Aug 1998

See all articles by Ken S. Cavalluzzo

Ken S. Cavalluzzo

SVA Plumb Wealth Management, LLC

Linda C. Cavalluzzo

CNA Corporation


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.

JEL Classification: G21

Suggested Citation

Cavalluzzo, Ken and Cavalluzzo, Linda C., Market Structure and Discrimination: The Case of Small Businesses. Available at SSRN:

Ken Cavalluzzo

SVA Plumb Wealth Management, LLC

18650 W Corporate Dr
Brookfield, WI 53045
United States

Linda C. Cavalluzzo (Contact Author)

CNA Corporation ( email )

4825 Mark Center Dr #100
Alexandria, VA 22311
United States
703-824-2197 (Phone)
703-824-2256 (Fax)

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