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Do Equally Owned Small Businesses Have Equal Access to Credit?

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  • Grace Kim

Abstract

Previous research in small-business financing has generally ignored those businesses owned equally by males and females. The rationale has been that such businesses share the characteristics of both types of owners and would confound any gender-based differences. This paper presents an empirical study in which the credit access experiences of equally owned small businesses are compared to those of their female- and male-owned entrepreneurial counterparts. Various measures of credit constraints are introduced that suggest that equally owned businesses often do experience larger constraints than male-owned businesses and smaller constraints than female-owned businesses, when all credit applicants are considered. However, the results are more mixed in comparisons of successful applicants’ constraints. A different approach from that of existing research is then used to study exactly how equally owned small businesses’ experiences are unique, rather than merely whether they differ from those of their counterparts. The evidence indicates that different factors are determining the credit application outcomes of all three ownership groups. Where similar determinants are found, equally owned businesses are influenced in a manner more similar to male-owned small businesses. The results show that equally owned small businesses’ credit access experience is not equally balanced between those of their counterparts. Copyright Springer 2006

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  • Grace Kim, 2006. "Do Equally Owned Small Businesses Have Equal Access to Credit?," Small Business Economics, Springer, vol. 27(4), pages 369-386, December.
    • Handle: RePEc:kap:sbusec:v:27:y:2006:i:4:p:369-386
    DOI: 10.1007/s11187-005-2558-7
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    References listed on IDEAS

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    1. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
    2. Ken Cavalluzzo & John Wolken, 2005. "Small Business Loan Turndowns, Personal Wealth, and Discrimination," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2153-2178, November.
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    Cited by:

    1. Douwere Grekou & Jenny Watt & Horatio M. Morgan, 2023. "Gender productivity gap: does gender-equal ownership compensate for female entrepreneurs’ lack of prior industry experience?," Small Business Economics, Springer, vol. 60(4), pages 1543-1571, April.
    2. Flèche, Sarah & Lepinteur, Anthony & Powdthavee, Nattavudh, 2021. "The importance of capital in closing the entrepreneurial gender gap: A longitudinal study of lottery wins," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 591-607.
    3. Vartuhi Tonoyan & Christopher Boudreaux, 2023. "Gender Diversity in Ownership and Firm Innovativeness in Emerging Markets. The Mediating Roles of R&D Investments and External Capital," Papers 2301.01127, arXiv.org.
    4. Canton, E.J.F. & Grilo, I. & Monteagudo, J. & van der Zwan, P.W., 2012. "Perceived credit constraints in the European Union," ERIM Report Series Research in Management ERS-2010-001-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. Erik Canton & Isabel Grilo & Josefa Monteagudo & Peter Zwan, 2013. "Perceived credit constraints in the European Union," Small Business Economics, Springer, vol. 41(3), pages 701-715, October.
    6. Dorgyles C.M. Kouakou, 2024. "Can past informality impede registered firms’ access to credit?," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-08, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    7. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces," MPRA Paper 52327, University Library of Munich, Germany.
    8. Morgan, Horatio M., 2013. "Equity-based Financial Slack and New Venture Performance: Evidence from matched single-founder ventures," MPRA Paper 50325, University Library of Munich, Germany.
    9. Sarah Flèche & Anthony Lepinteur & Nattavudh Powdthavee, 2021. "The Importance of Capital in Closing the Entrepreneurial Gender Gap: A Longitudinal Study of Lottery Wins," Working Papers halshs-03260992, HAL.
    10. Peter van der Zwan, 2014. "Bank loan application success by SMEs: the role of ownership structure and innovation," Scales Research Reports H201404, EIM Business and Policy Research.
    11. KOUAKOU, Dorgyles C.M., 2024. "Can past informality impede registered firms' access to credit?," MPRA Paper 121766, University Library of Munich, Germany.
    12. Amon Simba & Mahdi Tajeddin & Léo-Paul Dana & Domingo E. Ribeiro Soriano, 2024. "Deconstructing involuntary financial exclusion: a focus on African SMEs," Small Business Economics, Springer, vol. 62(1), pages 285-305, January.
    13. Morgan, Horatio M., 2013. "Equity-based Financial Slack and New Venture Performance: Evidence from matched single-founder ventures," MPRA Paper 50291, University Library of Munich, Germany.
    14. Gabriel, Cle-Anne, 2016. "What is challenging renewable energy entrepreneurs in developing countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 362-371.
    15. Geiger, Mark, 2020. "A meta-analysis of the gender gap(s) in venture funding: Funder- and entrepreneur-driven perspectives," Journal of Business Venturing Insights, Elsevier, vol. 13(C).
    16. Maria Noguera & Claudia Alvarez & José M. Merigó & David Urbano, 2015. "Determinants of female entrepreneurship in Spain: an institutional approach," Computational and Mathematical Organization Theory, Springer, vol. 21(4), pages 341-355, December.
    17. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Small Business Lending: Evidence from Canada," MPRA Paper 50813, University Library of Munich, Germany.
    18. Saridakis, George & Marlow, Susan & Storey, David J., 2014. "Do different factors explain male and female self-employment rates?," Journal of Business Venturing, Elsevier, vol. 29(3), pages 345-362.

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