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Is There A Liquidity Crisis For Small, Black-Owned Firms?

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  • SUSAN COLEMAN

    (University of Hartford, West Hartford, CT 06117, USA)

Abstract

Loans and trade credit are major sources of short-term debt and liquidity for small firms. This article uses data from the 1998 Survey of Small Business Finances to compare the borrowing experience of small firms owned by black men to those owned by white men. Results reveal that black firm owners were more dependent on loans from non-bank sources than white owners. Black men were significantly more likely to have been turned down for their most recent loan and were more likely to be discouraged from applying for loans. Results also reveal that black men were more likely to be turned down for trade credit. Overall, these findings seem to suggest that firms owned by black men have a more difficult time securing sources of short term debt than those owned by white men.

Suggested Citation

  • Susan Coleman, 2005. "Is There A Liquidity Crisis For Small, Black-Owned Firms?," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 29-47.
    • Handle: RePEc:wsi:jdexxx:v:10:y:2005:i:01:n:s1084946705000045
    DOI: 10.1142/S1084946705000045
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    Cited by:

    1. Jackson William E. & Marino Louis & Naidoo Jefrey S. & Tucker Reginald, 2018. "Size Matters: The Impact of Loan Size on Measures of Disparate Treatment toward Minority Entrepreneurs in the Small Firm Credit Market," Entrepreneurship Research Journal, De Gruyter, vol. 8(4), pages 1-16, October.
    2. Roman Bohdan & Elizabeth Tipton & Dean Kiefer & Arsen Djatej, 2014. "The Case of Minority Small Business Owners: Empirical Evidence of Problems in Loan Financing," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(3), pages 01-13, July.
    3. Jin, Xianzhe & Li, Jingnan & Gao, Jijun, 2022. "Joint effect of linguistic style and ethnicity on entrepreneurial fundraising: Evidence from equity crowdfunding," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).

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