Is there Ethnic Discrimination in the UK Market for Small Business Credit?

Fraser, Stuart

doi:10.1177/0266242609338756

Cited by 78 publications

(105 citation statements)

References 27 publications

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“…The results also support other work which, controlling for selection, finds little evidence for ethnic discriminations (Fraser, 2009b).…”

Section: Insert Table 3 Around Heresupporting

confidence: 88%

“…To control for this, we estimate a series of probit regression models for whether firms have difficulty obtaining finance (see Fraser et al 2009b;Mina et al 2013;Lee and Drever, 2014 for similar applications). These take two forms: (1) probit regressions where the dependent variable is either application for finance or one of the measures access to finance discussed above, or the choice to apply, and (2) Heckman regressions which also consider success of application for finance but which also control for selection effects in the likelihood of firms to apply for finance.…”

Section: Empirical Strategymentioning

confidence: 99%

“…A number of studies have considered ethnic discrimination and whether ethnic run firms are more, or less, likely to obtain business finance (Fraser, 2009b). These have tended to suggest that ethnic discrimination is not a significant problem, at least when controlling for the characteristics of firms and entrepreneurs.…”

Section: Independent Variablesmentioning

confidence: 99%

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Access to finance for innovative SMEs since the financial crisis

2015

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In the wake of the 2008 financial crisis, there has been increased focus on access to finance for small and medium sized firms. Some evidence from before the crisis suggested that it was harder for innovative firms to access finance. Yet no research has considered the differential effect of the crisis on innovative firms. This paper addresses this gap using a dataset of over 10,000 UK SME employers. We find that innovative firms are more likely to be turned down for finance than other firms, and this worsened significantly in the crisis. However, regressions controlling for a host of firm characteristics show that the worsening in general credit conditions has been more pronounced for non-innovative firms with the exception of absolute credit rationing which still remains more severe for innovative firms. The results suggest that there are two issues in the financial system. First, we find evidence of a structural problem which restricts access to finance for innovative firms. Second, we show a cyclical problem has been caused by the financial crisis and impacted relatively more severely on noninnovative firms.

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“…The results also support other work which, controlling for selection, finds little evidence for ethnic discriminations (Fraser, 2009b).…”

Section: Insert Table 3 Around Heresupporting

confidence: 88%

Section: Empirical Strategymentioning

confidence: 99%

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Access to finance for innovative SMEs since the financial crisis

2015

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“…Cavalluzzo et al (2002) included gender, but did not find a significant influence on loan rates. For small business loans in the U.K., Fraser (2009) found that ethnicity and gender did not influence financial rejection rates and loan rates. None of these studies included age of the entrepreneur as explanatory variable of loan rates or credit availability.…”

Section: Literature Review and Hypothesesmentioning

confidence: 93%

The role of demographics in small business loan pricing

Neuberger

Räthke-Döppner

2014

Small Bus Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractTo sustain growth in an aging economy, it is important to ease the financing of small firms by bank loans. Using bank internal data of small business loans in Germany, we examine the determinants of loan rates in the period 1995-2010. Beyond characteristics of the firm, the loan contract, and the lending relationship, demographic aspects matter. However, collateral and relationship lending play a larger role in loan pricing than the entrepreneur's age. Banks do not seem to discriminate older borrowers by higher loan rates. We rather find statistical discrimination of younger borrowers because of their lower wealth. Single entrepreneurs obtain cheaper loans than married ones. Firms in peripheral regions with low population density are disadvantaged by higher loan rates compared to those in agglomerated regions.JEL classification: D14, E43, G21, J14, L26

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“…This may mean that educational qualifications will have less effect when not combined with practical experience (Fraser, 2009). Consistent with this, Beckers and Blumberg (2013) find second generation immigrants in the Netherlands whilst being more highly educated and socially integrated fail to display improved business performance than first generation immigrants.…”

Section: Challenges Faced By Ethnic Entrepreneurs -Regulations and Mamentioning

confidence: 99%

Challenges and issues facing ethnic minority small business owners

Rahman

Ullah

Thompson

2018

The International Journal of Entrepreneurship and Innovation

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Studies investigating the challenges and barriers faced by ethnic minority entrepreneurs have often concentrated on areas where there is a large supportive ethnic minority community. Less work has been conducted on the experience of those entrepreneurs operating in cities where such ethnic resources may be less widely available. Considered from the perspective of mixed embeddedness framework, this study uses face-to-face interviews with 25 ethnic minority entrepreneurs to gain a greater understanding of the constraints experienced by the starting and running businesses in one such location, the Scottish city of Aberdeen in the United Kingdom. Although issues found by previous studies such as access to funding remain an issue, the entrepreneurs indicated problems with access to labour as United Kingdom Border Agency’s immigration rules and tightening of the Post Study Work visa have had a profound effect on these entrepreneurs. The results imply that the weakening of the ethnic resource microsphere has not opened up opportunities which are exploited by the entrepreneurs, but they have still been exposed to external forces from the regulatory macrosphere. Both entrepreneurs and policymakers need to think carefully about the retention, training and recruitment of staff. In particular, the wider ramifications of immigration rule changes need to be considered, but also whether entrepreneurs need to be more open to the potential of recruiting non-ethnic employees and if so what support is required to achieve this.

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Is there Ethnic Discrimination in the UK Market for Small Business Credit?

Cited by 78 publications

References 27 publications

Access to finance for innovative SMEs since the financial crisis

Access to finance for innovative SMEs since the financial crisis

The role of demographics in small business loan pricing

Challenges and issues facing ethnic minority small business owners

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