The State of Minority- and Women- Owned ... - Cleveland.com

D. Qualitative Evidence
Statistical Disparities in Capital Markets
Before moving on to the results of our multivariate analysis, we first report on what business
owners themselves say are their main problems. While this evidence is not conclusive in
determining whether discrimination exists, it highlights firms’ perceptions regarding
discrimination in obtaining credit. That African American-owned firms and other minorities
report greater difficulty in obtaining credit than do nonminority-owned firms, but report other
types of problems no more frequently, suggests either that discrimination takes place or that
perceptions of discrimination exist that are unwarranted. It therefore complements the
econometric analysis provided subsequently, which can distinguish between these two
hypotheses.
Table 6.3 summarizes, for the U.S. as a whole, responses to specific questions about problems
that firms confronted over the 12-month period before the date of response. In the top panel,
respondents were asked to what extent credit market conditions had been a problem. African
Americans and Hispanics were much more likely to say that it had been a “serious” problem
(31.3 percent and 22.9 percent, respectively) than nonminorities (12.7 percent). The bottom
panel of the table reports the results for eight other designated problem areas: (1) training costs;
(2) worker’s compensation costs; (3) health insurance costs; (4) IRS regulation or penalties;
(5) environmental regulations; (6) The American with Disabilities Act; (7) the Occupational
Safety and Health Act; and (8) The Family and Medical Leave Act. Differences between African
American-owned firms and Hispanic-owned firms, on the one hand, and nonminority-owned
firms, on the other, are much less pronounced in these eight areas than they are in relation to
credit market conditions. 266 The finding that minority-owned firms are largely indistinguishable
from nonminority-owned firms in reporting a variety of problems, except for the case of credit,
indicates that these firms perceive credit availability to be a particular problem for them.
Results are similar in Table 6.4 for the ENC division—with African American-owned firms and
Hispanic-owned firms being far more likely than nonminority-owned firms to say that credit
market conditions had been a serious problem in the preceding 12 months.
266 We also estimated a series of ordered Logit equations (not reported) to control for differences across firms in
their creditworthiness, location, industry, size, and the like. It is apparent from these regressions that African
American-owned firms were more likely to report that credit market conditions were especially serious.
NERA Economic Consulting 192