| Description |
The Latinx population accounts for 19% of the United States population. This study seeks to understand how a Latinx identity impacts entrepreneurial outcomes since disproportionate outcomes exist in entrepreneurship based on the identity of the founders. Using Latinx Critical Theory as framework, this paper explores the challenges in generating more revenue and accessing credit financing by comparing outcomes for different race and ethnicities. This study collects the contact information of over 27,000+ licensed construction contractors from the Utah Department of Occupational and Professional Licensing to distribute an IRB-approved 28 question Qualtrics survey. The survey collects firm data and owner demographic data. Using Python programming language, I ran descriptive statistics, OLS and Probit regression analysis, decision tree and XGBoost models on revenue performance and bank loan approvals. The results reveal that although Latinx represent 12.5 percent of contractors in Utah, they are account for 7.2 percent of approvals for bank loans. The OLS regression on revenue (R-squared = 0.559) found that contractors generated $46,431.80 more if they had a business loan from a bank (p-value = 0.04). The Probit regression on loan approvals (Pseudo R-squared = 0.243) and machine learning models found that approval rates increased if they have more years of experience, write a business plan, form a relationship with loan officers, and generate more than $1 million in revenue. The results from the findings prove that banks and credit unions must mitigate the bias of loan officers and create equitable credit assessments for Latinx entrepreneurs. |
