Reading Comprehension

In contrast to traditional analyses of minority busi-
ness, the sociological analysis contends that minority
business ownership is a group-level phenomenon, in that
it is largely dependent upon social-group resources for
(5) its development. Specifically, this analysis indicates that
support networks play a critical role in starting and
maintaining minority business enterprises by providing
owners with a range of assistance, from the informal
encouragement of family members and friends to
(10) dependable sources of labor and clientele from the
owner's ethnic group. Such self-help networks, which
encourage and support ethnic minority entrepreneurs,
consist of "primary" institutions, those closest to the
individual in shaping his or her behavior and beliefs.
(15) They are characterized by the face-to-face association
and cooperation of persons united by ties of mutual
concern. They form an intermediate social level between
the individual and larger "secondary " institutions based
on impersonal relationships. Primary institutions
(20) comprising the support network include kinship, peer,
and neighborhood or community subgroups.
A major function of self-help networks is financial
support. Most scholars agree that minority business
owners have depended primarily on family funds and
(25) ethnic community resources for investment capital .
Personal savings have been accumulated, often through
frugal living habits that require sacrifices by the entire
family and are thus a product of long-term family finan-
cial behavior. Additional loans and gifts from relatives.
(30) forthcoming because of group obligation rather than
narrow investment calculation, have supplemented
personal savings. Individual entrepreneurs do not neces-
sarily rely on their kin because they cannot obtain finan-
cial backing from commercial resources. They may actu-
(35) ally avoid banks because they assume that commercial
institutions either cannot comprehend the special needs
of minority enterprise or charge unreasonably high
interest rates.
Within the larger ethnic community, rotating credit
(40) associations have been used to raise capital. These asso-
ciations are informal clubs of friends and other trusted
members of the ethnic group who make regular contri-
butions to a fund that is given to each contributor in
rotation. One author estimates that 40 percent of New
(45)York Chinatown firms established during 1900-1950
utilized such associations as their initial source of
capital. However, recent immigrants and third or fourth
generations of older groups now employ rotating credit
associations only occasionally to raise investment funds.
(50) Some groups, like Black Americans, found other means
of financial support for their entrepreneurial efforts.The
first Black-operated banks were created in the late nine-
teenth century as depositories for dues collected from
fraternal or lodge groups, which themselves had sprung
(55) from Black churches. Black banks made limited invest-
ments in other Black enterprises. Irish immigrants in
American cities organized many building and loan asso-
ciations to provide capital for home construction and
purchase. They. in turn, provided work for many Irish
(60) home-building contractor firms. Other ethnic and
minority groups followed similar practices in founding
ethnic-directed financial institutions.


Which of the following can be inferred from the passage
about rotating credit associations?
(A) They were developed exclusively by Chinese
immigrants.
(B) They accounted for a significant portion of the
investment capital used by Chinese immigrants in
New York in the early twentieth century.
(C) Third-generation members of an immigrant group
who started businesses in the 1920's would have
been unlikely to rely on them.
(D) They were frequently joint endeavors by members
of two or three different ethnic groups.
(E) Recent immigrants still frequently turn to rotating
credit associations instead of banks for investment
capital.


Which of the following best describes the organization
of the second paragraph?
(A) An argument is delineated, followed by a
counterargument.
(B) An assertion is made and several examples are
provided to illustrate it.
(C) A situation is described and its historical
background is then outlined.
(D) An example of a phenomenon is given and is then
used as a basis for general conclusions.
(E) A group of parallel incidents is described and the
distinctions among the incidents are then clarified.