Culture, Ethnicity and Access to Bank Credit

All entrepreneurial ventures, regardless of their ownership, size, location and industry, require finance in order to initiate, maintain and expand operations. At the same time, access to finance is limited for entrepreneurs, specifically disadvantaged entrepreneurs. The classical literature postulates that access to finance is an economic outcome determined by different socio-economic determinants. However, there are significant disparities in availability of finance to mainstream and tribal entrepreneurs which has not been answered satisfactorily till date. This work investigated into the cultural and ethnic determinants of bank credit availability to tribal entrepreneurs in India. It also analyzed whether ethnic heterogeneity exists in bank credit allocation. Using primary data, the study found evidence of ethnic and religion bias in accessing bank credit. Our results indicated that education and family tradition in business significantly improve the probability of getting bank credit for tribal entrepreneurs.