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| Author: | Mitchell, K. Pearce, D.K. |
| Title: | Lending technologies, lending specialization and minority access to small-business loans |
| Journal: | Small business economics
2011 : OCT, VOL 37:3 p. 277-304 |
| Index terms: | small business loans discrimination asymmetric information entrepreneurship |
| Freeterms: | fair lending |
| Language: | eng |
| Abstract: | Minority access to small-business loans is studied by using a probit model of loan application denial, identifying two loan types (line-of-credit loans and non-line-of-credit loans) made by two lender types (commercial banks and nonbank financial institutions). We utilize data from the 1998 Survey of Small Business Finances. Evidence supporting minority equal access to bank credit lines and nonbank non-line-of-credit loans in highly competitive loan markets is found; in less competitive markets we find evidence suggesting unequal access to these loans. The results also imply unequal minority access to bank non-line-of-credit loans, independent of loan market competitiveness. Our findings are different from previous research which sees small-business loans as a homogenous product and indicates unequal minority access to small-business loans generally. We argue that the multiple small-business lending technologies and loan specialization by lenders accounts for our findings and show the need to treat small-business loans as a heterogeneous product when researching equal access to small-business credit. |
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