Abstract
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 as large as 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 by commercial banks than nonminority companies that have otherwise identical traits. Undercapitalization, in turn, is shown to increase the likelihood of firm discontinuance. Alleviation of undercapitalization problems would promote the development of black owned businesses in the construction industry.
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