Commercial Bank Lending Practices And The Development Of Black-Owned Construction Companies

Timothy Bates and Caren Grown

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Although the construction industry has been a tremendous growth industry for black entrepreneurs in recent years, black-owned construction firms, on average, are less than half the size of those owned by nonminorities. Previous findings suggest that limited access to financial capital, particularly bank loans, has restricted the size of black-owned businesses. Examination of nationwide random samples of construction companies reveals that black firms are treated differently than nonminorities when they borrow from commercial banks: they get smaller loans than nonminorities who have otherwise identical traits. Undercapitalization, in turn, is shown to increase the likelihood of firm discontinuance. Alleviation of undercapitalization problems would help promote the development of black-owned businesses in the construction industry.

Keywords: CES; economic; research; micro; data; microdata; chief; economist (search for similar items in EconPapers)
Date: 1991-12
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:91-9

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