Edited by Amelie F. Constant and Klaus F. Zimmermann
Chapter 8: Minority and immigrant entrepreneurs: access to financial capital
A large literature examines the impact of financial capital on small business formation and performance. The findings from this literature indicate that access to financial capital is one of the most important determinants of small business creation and success. Many previous studies also examine the barriers that disadvantaged minorities face in obtaining access to capital for their businesses. These studies find that access to capital, wealth inequality and lending discrimination create substantial barriers for minority business success. Wealth inequality represents a troubling and persistent root of this problem because the owner’s wealth can be invested directly in the business or used as collateral to obtain business loans, and the disparities are extremely large. For example, in the United States, African-Americans and Latino shave median wealth levels that are one-ninth to one-thirteenth white levels (US Census Bureau, 2011).
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