Competition, Small Business Financing, and Discrimination: Evidence from a New Survey

Posted: 9 Nov 2009

See all articles by John D. Wolken

John D. Wolken

Board of Governors of the Federal Reserve System

Ken S. Cavalluzzo

SVA Plumb Wealth Management, LLC

Linda C. Cavalluzzo

CNA Corporation

Multiple version iconThere are 3 versions of this paper

Date Written: 2002

Abstract

We analyze credit applications, loan denials, andinterest rates paid by small businesses across owner gender, race, andethnicity. In addition, we examine data from owners who said they did not applyfor credit because they believed that their applications would have been turneddown. After controlling for a rich set of explanatory variables, includingpersonal and business credit histories, substantial differences in denial ratesbetween firms owned by African Americans and white males remain. Moreover,consistent with Becker's classic theories (1957), we find evidence thatincreases in competition in the firm's local banking market reduces thesedifferences. (Publication abstract)

Keywords: National Survey of Small Business Finances (Federal Reserve Board), Gender, Credit discrimination, Debt financing, Ethnic & racial groups, Individual traits, African Americans, Females

Suggested Citation

Wolken, John D. and Cavalluzzo, Ken and Cavalluzzo, Linda C., Competition, Small Business Financing, and Discrimination: Evidence from a New Survey (2002). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1502039

John D. Wolken (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2503 (Phone)

Ken Cavalluzzo

SVA Plumb Wealth Management, LLC

18650 W Corporate Dr
#200
Brookfield, WI 53045
United States

Linda C. Cavalluzzo

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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