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

Statistical Disparities in Capital Markets
Table 6.14 shows results for the ENC. Findings are similar to those observed for the nation as a
whole.
Table 6.14. Models of Interest Rate Charged—ENC
Specification
1) All loans (controls as
in Column 5, Table
6.8)
2) No credit problems
3) Proprietorships and
Partnerships
4) Corporations
5) Fewer than 10
Employees
6) 10 or More
Employees
7) Local
8) Regional, National, or
International
Source: See Table 6.1.
Notes: See Table 6.13.
African
American
0.763
(2.51)
1.121
(2.80)
1.786
(2.35)
0.423
(1.23)
0.728
(1.38)
0.467
(1.18)
0.486
(0.88)
1.345
(3.51)
African
American
* ENC
1.576
(2.29)
0.576
(0.65)
0.735
(0.49)
1.684
(1.93)
1.925
(1.85)
0.168
(0.11)
Asian/
Pacific
Islander
0.446
(1.40)
Creditworthiness
0.550
(1.43)
Organization Type
0.748
(0.90)
0.413
(1.15)
1993 Firm Size
-0.316
(0.51)
0.519
(1.37)
Scope of Sales Market
1.607
(1.57)
1.395
(1.27)
-0.133
(0.23)
1.298
(3.05)
Native
American Hispanic
-0.801
(1.02)
0.539
(0.56)
2.008
(0.70)
-0.828
(1.13)
-0.899
(0.61)
-0.437
(0.48)
1.404
(0.89)
-1.844
(2.04)
G. Loan Approval Rates and Access to Credit
0.609
(2.26)
0.564
(1.87)
1.103
(1.92)
0.635
(1.93)
0.801
(1.75)
0.613
(1.63)
0.971
(2.40)
0.493
(1.21)
Nonminority
Female
0.023
(0.12)
0.143
(0.64)
-0.276
(0.57)
0.166
(0.75)
-0.394
(1.20)
0.238
(0.92)
0.329
(1.01)
-0.217
(0.82)
Sample
Size
The results presented so far may be biased toward finding too small a disparity between
nonminority- and African American-owned firms because those minority-owned firms that
actually apply for credit may represent a selected sample of the most creditworthy. More
marginal minority-owned firms whose loans may have been accepted had they been owned by
nonminorities may not even be among the pool of loan applicants. First, these firms may have
gone out of business or may not have had the opportunity to commence operations because of
their inability to obtain capital. Second, some existing firms may have chosen not to apply for
credit because they were afraid their application would be rejected due to prejudice.
Although we have no direct evidence regarding the first proposition, data from the 1993 NSSBF
provide some evidence for the second: African American- and Hispanic-owned firms are much
NERA Economic Consulting 209
1,454
1,137
364
1,090
574
880
633
821