Title: Financial institutions and the taxi-cab industry: an exploratory study in Canada

Authors: Amarjit Gill; Nahum Biger; Léo-Paul Dana; John D. Obradovich; Ansari Mohamed

Addresses: The University of Saskatchewan, Edwards School of Business, 25 Campus Drive, Saskatoon, SK, S7N-5A7, Canada ' School of Business, Carmel Academic Center, Haifa, 33031, Israel ' Montpellier Research in Management, Groupe Sup de Co Montpellier Business School, 2300 avenue des Moulins, Montpellier, France ' Spring Arbor University, 106 E. Main Street, Spring Arbor, MI, 49283, USA ' Canadian Western Bank, 100 - 2548 Clearbrook Road, Abbotsford, BC, V2T 2Y4, Canada

Abstract: A current challenge taxi-cab owner/operators face in Canada is the lack of financing for taxi-cabs. This article examines business opportunities and lending risk; it also provides risk management strategies for financial institutions to manage the risk of lending to the taxi-cab industry. Members of the boards of directors and shareholders from the Canadian taxi-cab industry, and lenders from financial institutions that do not provide financing to taxi-cab owner/operators, were interviewed. Board members and shareholders were asked about their perceptions regarding business opportunity, risk, and their willingness to provide collateral for taxi-cab loans. Lenders of financial institutions were asked about their reasons for not providing taxi-cab loans. The findings of this study show that there is a reasonably attractive opportunity for financial institutions to offer financing for taxi-cab owner/operators. However, the findings also show that there are both systematic and unsystematic risks in lending to the taxi-cab industry. This offers recommendations on risk management strategies for Canadian lenders to mitigate the risk in lending to the Canadian taxi-cab industry. Our findings may be useful for new and existing financial/lending institutions, lenders, investors, and taxi-cab owner/operators.

Keywords: entrepreneurship; banking; credit; finance; business opportunities; lending risk; financial institutions; financial risk; service industry; taxi-cab industry; taxis; Canada; risk management; taxi-cabs.

DOI: 10.1504/IJESB.2014.063779

International Journal of Entrepreneurship and Small Business, 2014 Vol.22 No.3, pp.326 - 342

Published online: 29 Jul 2014 *

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