Access to financial capital among US businesses : the case of african american firms
By: ROBB, Alicia M
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Contributor(s): FAIRLIE, Robert W.
Material type: 
ArticlePublisher: Thousand Oaks : SAGE, September 2007The Annals of the American Academy of Political and Social Science 613, p. 47-72Abstract: Using data from multiple sources, including the Characteristics of Business Owners Survey, the authors trace out the relationship between wealth and access to financial capital and the African Americanowned business. African Americans are found to have levels of wealth that are one-eleventh those of whites. Starting with this disparity, blacks are much less likely to start businesses than are whites, which results in a substantially lower rate of business ownership. Even for those black entrepreneurs who are successful in starting businesses, the authors find that they invest much less capital at start-up on average than white entrepreneurs. Lower levels of start-up capital among black businesses appear to also limit their ability to grow and succeed. Racial disparities in start-up capital contribute to higher failure rates, lower sales and profits, less employment among black-owned businesses, and less survivability of the business.
Using data from multiple sources, including the Characteristics of Business Owners Survey, the authors trace out the relationship between wealth and access to financial capital and the African Americanowned business. African Americans are found to have levels of wealth that are one-eleventh those of whites. Starting with this disparity, blacks are much less likely to start businesses than are whites, which results in a substantially lower rate of business ownership. Even for those black entrepreneurs who are successful in starting businesses, the authors find that they invest much less capital at start-up on average than white entrepreneurs. Lower levels of start-up capital among black businesses appear to also limit their ability to grow and succeed. Racial disparities in start-up capital contribute to higher failure rates, lower sales and profits, less employment among black-owned businesses, and less survivability of the business.
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