Explaining ethnic differentials in credit market outcomes in Zimbabwe

Economic Development and Cultural Change

Volumn 47, Issue 3, 1999, Pages 585-604

  Raturi, Mayank ^a   Swamy, Anand V ^b  

^a WORLD BANK   (United States)

^b UNIVERSITY OF MARYLAND   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CREDIT PROVISION; ETHNICITY; FINANCIAL PROVISION;

ZIMBABWE;

EID: 0032768366     PISSN: 00130079     EISSN: None     Source Type: Journal    
DOI: 10.1086/452420     Document Type: Article

References (27)

1. A. Munnell, G. M. B. Tootell, L. E. Browne, and J. McNeaney, "Mort-gage Lending in Boston: Interpreting HMDA Data," American Economic Review 25 (1996): 25-53.
2. See M. Kadhani and R. Riddell, "Education," in Zimbabwe's Inheritance, ed. C. Stoneman (New York: St. Martin's Press, 1980).
3. For discussion of these issues, see M. Fafchamps, J. Pender, and E. Robinson, Enterprise Finance in Zimbabwe, RPED Country Study Series (Washington, D.C.: World Bank, 1995); R. Bradburd and B. Levy, "Zimbabwe's New Entrepreneurs: An Emerging Success Story?" RPED discussion paper (World Bank, Washington, D.C., 1995); R. Weiss, Zimbabwe's New Elite (New York: British Academic Press, 1994).
4. For discussion of these issues, see M. Fafchamps, J. Pender, and E. Robinson, Enterprise Finance in Zimbabwe, RPED Country Study Series (Washington, D.C.: World Bank, 1995); R. Bradburd and B. Levy, "Zimbabwe's New Entrepreneurs: An Emerging Success Story?" RPED discussion paper (World Bank, Washington, D.C., 1995); R. Weiss, Zimbabwe's New Elite (New York: British Academic Press, 1994).
5. For discussion of these issues, see M. Fafchamps, J. Pender, and E. Robinson, Enterprise Finance in Zimbabwe, RPED Country Study Series (Washington, D.C.: World Bank, 1995); R. Bradburd and B. Levy, "Zimbabwe's New Entrepreneurs: An Emerging Success Story?" RPED discussion paper (World Bank, Washington, D.C., 1995); R. Weiss, Zimbabwe's New Elite (New York: British Academic Press, 1994).
6. J. Gunning, T. Mumvuma, and M. Pomp, "Capacity Utilization and Investment," in The Manufacturing Sector in Zimbabwe: Dynamics and Constraints, RPED Country Study Series (Washington, D.C.: World Bank, 1994); J. W. Gunning and M. Pomp, "Growth, Adjustment, and Resource Allocation," in The Manufacturing Sector in Zimbabwe: Industrial Change under Structural Adjustment, ed. J. W. Gunning and C. Mumbengegwi, RPED Country Study Series (Washington, D.C.: World Bank, 1995).
7. J. Gunning, T. Mumvuma, and M. Pomp, "Capacity Utilization and Investment," in The Manufacturing Sector in Zimbabwe: Dynamics and Constraints, RPED Country Study Series (Washington, D.C.: World Bank, 1994); J. W. Gunning and M. Pomp, "Growth, Adjustment, and Resource Allocation," in The Manufacturing Sector in Zimbabwe: Industrial Change under Structural Adjustment, ed. J. W. Gunning and C. Mumbengegwi, RPED Country Study Series (Washington, D.C.: World Bank, 1995).
8. Gunning, Mumvuma, and Pomp.
9. C. Mumbengegwi and J. ter Wengel, "The Finance of Investment by Firms," in The Manufacturing Sector in Zimbabwe: Dynamics and Constraints, RPED Country Study Series (Washington, D.C., World Bank, 1994); J. Bade, "Finance: Credit and Indebtedness," in The Manufacturing Sector in Zimbabwe: Industrial Change under Structural Adjustment, RPED Country Series (Washington, D.C.: World Bank, 1995).
10. C. Mumbengegwi and J. ter Wengel, "The Finance of Investment by Firms," in The Manufacturing Sector in Zimbabwe: Dynamics and Constraints, RPED Country Study Series (Washington, D.C., World Bank, 1994); J. Bade, "Finance: Credit and Indebtedness," in The Manufacturing Sector in Zimbabwe: Industrial Change under Structural Adjustment, RPED Country Series (Washington, D.C.: World Bank, 1995).
11. A. Velenchek, "Government Intervention, Efficiency Wages, and the Employer Size Wage Effect in Zimbabwe," RPED discussion paper (World Bank, Washington, D.C., 1996).
12. See G. Cain, "The Economic Analysis of Labor Market Discrimination: A Survey," in Handbook of Labor Economics, ed. O. Ashenfelter and R. Layard (Amsterdam: Elsevier Science Publishers, 1986).
13. C. Stoneman and R. Davies, "The Economy: An Overview," in Zimbabwe's Inheritance (New York: St. Martin's Press, 1981), using earnings information from various sectors of the economy including agriculture and manufacturing, report that in 1977 the average earnings of white and black employees were $6,156 and $589, respectively.
14. i) with respect to the relevant explanatory variable, where Φ(·) is the cumulative distribution function of the standard normal variable.
15. Marcel Fafchamps, "Trade Credit in Zimbabwean Manufacturing," World Development 25, no. 5 (May 1997): 795-815, and "Ethnicity and Markets: Supplier Credit and African Manufacturing" (Stanford University, Department of Economics, Palo Alto, Calif., 1996, mimeographed).
16. Marcel Fafchamps, "Trade Credit in Zimbabwean Manufacturing," World Development 25, no. 5 (May 1997): 795-815, and "Ethnicity and Markets: Supplier Credit and African Manufacturing" (Stanford University, Department of Economics, Palo Alto, Calif., 1996, mimeographed).
17. When we do not include the log of number of workers and the log of value of capital stock as regressors, the marginal effect of black ownership on the probability of being credit constrained is 34%, with a P-value of .0077; when we include these variables, the marginal effect is 15%, with a P-value of .08.
18. W. H. Greene, Limdep Version 7.0. User's Manual (Plainview, N.Y.: Econometric Software Inc., 1995).
19. A. Deaton, "Data and Econometrics for Development Analysis," Research Program in Development Studies (Princeton University, Princeton, N.J., 1993, mimeographed).
20. 2 is .71.
21. See Deaton, p. 76.
22. Despite the problems discussed above, Bade (n. 6 above) attempts to solve the sample selection problem using two-step and maximum likelihood methods and concludes that banks do not discriminate against black applicants.
23. We thank Andrew Foster for pointing this out.
24. Profits are defined as the value of sales minus the following costs: labor, raw materials, rent, electricity, water, telephone, and fuel.
25. See note 11.
26. W. H. Greene, Econometric Analysis (New York: Macmillan, 1993), theorem 22.4, p. 707.
27. Greene, p. 685.