Discrimination in bank lending for business purposes is a hotly debated topic (Seiberg, 1994, pp. 1-2; Shaw, 1995, pp. 4-6). The general contentions of the criticisms of lending practices in relation to businesses is that members of ethnic and racial minority groups, low-income persons, and women are denied access to business credit to greater extents than are white people, middle- and upper income individuals, and men (Pear, 1993, p. D1). Most lenders reply that, while the intent of programs to make credit more accessible to all persons is worthy, the implementation of the programs fail to recognize the realities of the financial marketplace (Cocheo, 1995, pp. 9-10).
The relationship between discrimination in bank lending for business purposes and discrimination in lending generally is interlocking to the extent that an assessment of one aspect of discrimination in lending cannot proceed effectively without addressing the other half of the discrimination in lending equation (Garsson, 1994, pp. 1-2). Further, any investigation of discrimination in lending based on socioeconomic status cannot be divorced from discrimination based on ethnicity, race, and gender because of the strong ties among the four variables in relation to accessibility to credit (Seiberg, 1995, pp. 1-2).
Thus, while the primary focus of this study is on discrimination in business lending to low-income persons, issues of discrimination in lending for purposes other than business activities, and issues associated with credit accessibility in relation to ethnicity, race, and gender also are addressed in the analyses. The research question investigated in this study concerns desirability of setting aside special funds for the extension of business credit to low-income persons. The relationships between this issue and the ethnicity, race, and gender of low-income business loan applicants also are included in the analyses, however, as is the relationship betwee...