Financial institutions and the taxi-cab industry: an exploratory study in Canada

Amarjit Gill, Nahum Biger, Léo-Paul Dana, John D. Obradovich and Ansari Mohamed

International Journal of Entrepreneurship and Small Business, 2014, vol. 22, issue 3, 326-342

Abstract: A current challenge taxi-cab owner/operators face in Canada is the lack of financing for taxi-cabs. This article examines business opportunities and lending risk; it also provides risk management strategies for financial institutions to manage the risk of lending to the taxi-cab industry. Members of the boards of directors and shareholders from the Canadian taxi-cab industry, and lenders from financial institutions that do not provide financing to taxi-cab owner/operators, were interviewed. Board members and shareholders were asked about their perceptions regarding business opportunity, risk, and their willingness to provide collateral for taxi-cab loans. Lenders of financial institutions were asked about their reasons for not providing taxi-cab loans. The findings of this study show that there is a reasonably attractive opportunity for financial institutions to offer financing for taxi-cab owner/operators. However, the findings also show that there are both systematic and unsystematic risks in lending to the taxi-cab industry. This offers recommendations on risk management strategies for Canadian lenders to mitigate the risk in lending to the Canadian taxi-cab industry. Our findings may be useful for new and existing financial/lending institutions, lenders, investors, and taxi-cab owner/operators.

Keywords: entrepreneurship; banking; credit; finance; business opportunities; lending risk; financial institutions; financial risk; service industry; taxi-cab industry; taxis; Canada; risk management; taxi-cabs. (search for similar items in EconPapers)
Date: 2014
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