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Full-Text Articles in Social and Behavioral Sciences
Do Credit Market Barriers Exist For Minority And Women Entrepreneurs?, Lloyd Blanchard, Bo Zhao, John Yinger
Do Credit Market Barriers Exist For Minority And Women Entrepreneurs?, Lloyd Blanchard, Bo Zhao, John Yinger
Center for Policy Research
This paper examines whether methodological deficiencies in the literature on discrimination in small business credit markets have a significant impact on the estimation of discrimination and provides a preliminary investigation into the causes of discrimination in these markets. We find substantial, statistically significant evidence of discrimination in loan approval against black-owned and Hispanic-owned businesses in 1998 with additional control variables, with a variety of different specifications, and with a simultaneous model of the application and loan-denial decisions. We also find that discrimination in small business lending may take the form of statistical discrimination, driven by lenders' stereotypes about the ability …