Lender Automation and Racial Disparities in Credit Access PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Lender Automation and Racial Disparities in Credit Access PDF full book. Access full book title Lender Automation and Racial Disparities in Credit Access by Sabrina T. Howell. Download full books in PDF and EPUB format.
Author: Sabrina T. Howell
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Process automation reduces racial disparities in credit access through 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), a setting where private lenders faced no credit risk but decided which firms to serve. Black-owned firms primarily obtained PPP loans 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, pre-existing banking relationships, firm performance, or fraud rates.
Author: Sabrina T. Howell
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Process automation reduces racial disparities in credit access through 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), a setting where private lenders faced no credit risk but decided which firms to serve. Black-owned firms primarily obtained PPP loans 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, pre-existing banking relationships, firm performance, or fraud rates.
Author: Sabrina T. Howell
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
By enabling smaller loans, broader geographic reach, and less human bias in decision-making, process automation may reduce racial disparities in access to financial services. We find evidence for all three channels using a setting where private lenders faced no credit risk but decided who to serve: the Paycheck Protection Program (PPP), which provided loans to small businesses during COVID-19. Black-owned firms disproportionately obtained their PPP loans from fintech lenders, especially in areas with high racial animus. After traditional banks automate their loan application processes, their PPP lending to Black-owned businesses increases. Our findings cannot be fully explained by racial differences in loan application behaviors, pre-existing banking relationships, contemporaneous firm performance, or fraud rates.
Author:
Publisher:
ISBN:
Category : Discrimination in consumer credit
Languages : en
Pages : 26
Get Book Here
Book Description
A looming foreclosure crisis confronts America as lending institutions have engaged in new forms of dangerous high-cost lending. Most of the high-cost or subprime lending made in recent years feature adjustable rate mortgages (ARMs) with low "teaser" rates for the first few years followed by rapidly rising rates. Incredibly, many lenders assessed borrowers' abilities to repay only at the low teaser rates. These lose underwriting standards have created the conditions for a perfect storm as almost 2 million of the ARM loans will re-set or start adjusting upward from their initial rates in 2007 and 2008. While they were slow to act, the federal regulatory agencies have finally raised the alarm and are now advising lenders to reform their underwriting practices. In the backdrop of the risky high-cost lending practices, NCRC observes striking racial disparities in high-cost lending. If a consumer is a minority, particularly an African-American or Hispanic, the consumer is most at risk of receiving a poorly underwritten high-cost loan. In addition, middle-class or upper-class status does not shield minorities from receiving dangerous high-cost loans. In fact, NCRC observes that racial differences in lending increase as income levels increase. In other words, middle- and upper-income (MUI) minorities are more likely relative to their MUI white counterparts to receive high-cost loans than low- and moderate-income (LMI) minorities are relative to LMI whites. Mainstream media has taken notice of the predatory lending plague afflicting middle-class minority communities. For example, the Wall Street Journal recently wrote a poignant and detailed article describing widespread foreclosures due to predatory lending in Detroit's middle-income African-American communities. NCRC has always said that responsible high-cost lending serves legitimate credit needs. High-cost loans compensate lenders for the added risk of lending to borrowers with credit imperfections. However, wide differences in lending by race, even when accounting for income levels, suggests that more minorities are receiving high-cost loans than is justified based on creditworthiness.
Author: Margery Austin Turner
Publisher: DIANE Publishing
ISBN: 0788187945
Category :
Languages : en
Pages : 69
Get Book Here
Book Description
The U.S. Department of Housing and Human Development (HUD) presents the report "What We Know About Mortgage Lending Discrimination in America." The report outlines how discrimination can affect access to mortgage capital for minorities.
Author: John Goering
Publisher: Routledge
ISBN: 0429827954
Category : Social Science
Languages : en
Pages : 665
Get Book Here
Book Description
First published in 1997, this volume features a wealth of contributions discussing mortgage lending discrimination and the role of the FHA, fair lending enforcement and the Decatur case, along with the future of mortgage discrimination research. This key civil rights debate in the wake of the Fair Housing Act 25 years prior is evaluated and clarified through rigorous review of fair lending research, applied projects and enforcement activities to date. It argues forcefully that the right to take out a mortgage to buy a home should be conditioned only upon one’s credit worthiness and not on one’s race or ethnic group.
Author: Sabrina T. Howell
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Raffi E. García
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Do racial protests help or hurt access to credit for small businesses? This paper examines the effect of local racial demonstrations, such as Black Lives Matter (BLM) protests, and the subsequent racial justice movement following the death of George Floyd on racial disparities in the Paycheck Protection Program (PPP) loan disbursements. Using difference-in-differences, we find that local racial protests improve credit access for black business owners. We find that social media and public attention after the death of George Floyd amplified the broader BLM mission statement of racial equity, resulting in a positive moderating effect on loan amounts distributed to black owners relative to other racial-ethnic groups. Our findings show that racial implicit and explicit bias diminishes after George Floyd's death with stronger effects in finance occupations.
Author: Karen G. Mills
Publisher: Springer Nature
ISBN: 3031556127
Category : Banks and banking
Languages : en
Pages : 285
Get Book Here
Book Description
Small businesses are the backbone of the U.S. economy. They are the biggest job creators and offer a path to the American Dream. But for many, it is difficult to get the capital they need to operate and succeed. In Fintech, Small Business & the American Dream, former U.S. Small Business Administrator and Senior Fellow at Harvard Business School, Karen G. Mills, focuses on the needs of small businesses for capital and how technology will transform the small business lending market. This is a market that has been plagued by frictions: it is hard for a lender to figure out which small businesses are creditworthy, and borrowers often don't know how much money or what kind of loan they need. Every small business is different; one day the borrower is a dry cleaner and the next a parts supplier, making it difficult for lenders to understand each business's unique circumstances. Today, however, big data and artificial intelligence have the power to illuminate the opaque nature of a small business's finances and make it easier for them access capital to weather bumpy cash flows or to invest in growth opportunities. Beginning in the dark days following the 2008-9 recession and continuing through the crisis of the Covid-19 Pandemic, Mills charts how fintech has changed and will continue to change small business lending. In the new fintech landscape financial products are embedded in applications that small business owners use on daily basis, and data powered algorithms provide automated insights to determine which businesses are creditworthy. Digital challenger banks, big tech and traditional banks and credit card companies are deciding how they want to engage in the new lending ecosystem. Who will be the winners and losers? How should regulators respond? In this pivotal moment, Mills elucidates how financial innovation and wise regulation can restore a path to the American Dream by improving access to small business credit. An ambitious book grappling with the broad significance of small business to the economy, the historical role of credit markets, the dynamics of innovation cycles, and the policy implications for regulation, this second edition of Fintech, Small Business & the American Dream is relevant to bankers, regulators and fintech entrepreneurs and investors; in fact, to anyone who is interested in the future of small business in America.
Author:
Publisher:
ISBN:
Category : Discrimination in banking
Languages : en
Pages : 15
Get Book Here
Book Description
Author: Robert W. Fairlie
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
We use confidential and restricted-access data from the Kauffman Firm Survey and matched administrative data on credit scores to explore racial disparities in access to capital for new business ventures. The novel results on racial inequality in startup financing indicate that black-owned startups start smaller and stay smaller over the entire first eight years of their existence. Black startups face more difficulty in raising external capital, especially external debt. We find that disparities in credit-worthiness constrain black entreprenuers, but perceptions of treatment by banks also hold them back. Black entrepreneurs apply for loans less often than white entrepreneurs largely because they expect to be denied credit, even when they have a good credit history and in settings where strong local banks favor new business development.
