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

Table 6.7. Types of Problems Facing Your Business, by Race and Gender
Nonminority
Male
Nonminority
Female
Minority
Male
Statistical Disparities in Capital Markets
Minority
Female
African
American Hispanic
Asian/
Pacific
Islander
Availability of credit 19 23 54 38 46 52 34
Rising health care costs 60 49 50 41 31 42 66
Excessive tax burden 49 46 48 42 46 34 51
Lack of qualified workers 37 28 33 17 22 20 34
Rising energy costs 37 35 36 35 29 34 44
Rising costs of materials 44 47 36 47 53 42 32
Legal reform 21 15 15 12 11 10 17
Number of firms 415 356 80 81 55 50 41
Source: U.S. Chamber of Commerce (2005), Appendix tables, page 55, downloadable at
http://www.uschamber.com/publications/reports/access_to_capital.htm (viewed 3 July 2012).
Notes: (1) Percentages may total to more than 100% because respondents had the option to select multiple choices.
(2) “Minority” also includes 14 firms owned by Native Americans.
In summary, African American-owned and to a lesser extent other minority-owned firms and
women-owned firms report that they had problems with the availability of credit in the past and
expected that such difficulties would continue into the future. Whether or not these perceptions
are consistent with the presence of discrimination can be discerned from the econometric
analyses to follow.
E. Differences in Loan Denial Rates by Race, Ethnicity or Gender
Evidence presented to this point indicates that minority-owned firms are more likely to be denied
loans and report that their lack of access to credit significantly impairs their business. Can these
differences be explained by such things as differences in size, creditworthiness, location, or other
factors as some have suggested in the literature on discrimination in mortgage lending (Horne,
1994; Bauer and Cromwell, 1994; and Yezer, Phillips, and Trost, 1994)? To address this
question, we turn to an econometric examination of whether the loan requests made by minorityowned
firms are more likely to be denied, holding constant important differences among firms.
In Table 6.8 and Table 6.9, we report the results from a series of loan denial Probit regressions of
the form specified in Equation (1) using data from the 1993 NSSBF for the U.S. and the ENC
division. 270 As indicated earlier, the 1993-2003 datasets have the particular advantage that they
270 Firms owned 50-50 by minorities and non-minorities are excluded from this and all subsequent analyses, as are
nonminority firms owned 50-50 by women and men.
NERA Economic Consulting 196