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

2. Differences in Loan Denial Rates by Race/Ethnicity
Statistical Disparities in Capital Markets
Tables 6.25 and 6.26 present estimates of loan denial probabilities for the nation as a whole and
for the ENC using a regression model comparable to that used with the 1993 and 1998 survey
waves. 300
Column (1) in Table 6.25 (comparable to Table 6.8 for 1993 and 6.18 for 1998) shows that
African American-owned firms in 2003 had a 45.9 percentage point higher probability of denial
than nonminority male-owned firms before taking into account the creditworthiness of the firm
or any other characteristics. The addition of a large number of controls reduces the percentage
point differential for African Americans to 9.4 in Column (5) as the full set of controls is added.
The coefficients in Column (5) for nonminority females and other minority groups are not
significant, however.
Table 6.26 (comparable to Table 6.9 for 1993 and 6.19 for 1998) focuses on the ENC division
and yields similar results—showing significantly larger denial probabilities for African
American-owned firms than for nonminority male-owned firms, persisting even after the
addition of all of the control variables.
300 In 2003, the credit application question was changed from 1998 to once again include requests for renewals as
well as new loans, making it comparable to the 1993 version.
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