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Lender Automation and Racial Disparities in Credit Access.
- Source :
- Journal of Finance (John Wiley & Sons, Inc.); Apr2024, Vol. 79 Issue 2, p1457-1512, 56p
- Publication Year :
- 2024
-
Abstract
- Process automation reduces racial disparities in credit access by enabling smaller loans, broadening banks' geographic reach, and removing human biases from decision making. We document these findings in the context of the Paycheck Protection Program (PPP), where private lenders faced no credit risk but decided which firms to serve. Black‐owned firms obtained PPP loans primarily from automated fintech lenders, especially in areas with high racial animus. After traditional banks automated their loan processing procedures, their PPP lending to Black‐owned firms increased. Our findings cannot be fully explained by racial differences in loan application behaviors, preexisting banking relationships, firm performance, or fraud rates. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00221082
- Volume :
- 79
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Journal of Finance (John Wiley & Sons, Inc.)
- Publication Type :
- Academic Journal
- Accession number :
- 176077891
- Full Text :
- https://doi.org/10.1111/jofi.13303