Lender Automation and Racial Disparities: SSRN working paper

Summary

SSRN page for the working paper Lender Automation and Racial Disparities in Credit Access (92 pages, posted 11 Oct 2021, last revised 21 Nov 2022) by Sabrina T Howell, Theresa Kuchler, David Snitkof, Johannes Stroebel and Jun Wong. The abstract says process automation reduces racial disparities in credit access through smaller loans, broader geographic reach and removal of human biases, documented in the Paycheck Protection Program. It says Black-owned firms primarily obtained PPP loans from automated fintech lenders, especially in areas with high racial animus, and that PPP lending to Black-owned firms increased after traditional banks automated their loan processing.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Download This Paper

Open PDF in Browser

Add Paper to My Library

Share:

Permalink

Using these links will ensure access to this page indefinitely

Copy URL

Copy DOI

Lender Automation and Racial Disparities in Credit Access

92 Pages Posted: 11 Oct 2021 Last revised: 21 Nov 2022

See all articles by Sabrina T Howell

Sabrina T Howell

Harvard Business School; National Bureau of Economic Research (NBER)

Theresa Kuchler

New York University (NYU)

David Snitkof

Ocrolus

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jun Wong

New York University (NYU)

Date Written: November 11, 2022

Abstract

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.

Keywords: Fintech, Automation, Small business loans, racial discrimination, PPP

JEL Classification: G21, G23, G28, G41, J15

Suggested Citation: Suggested Citation

Howell, Sabrina T and Kuchler, Theresa and Snitkof, David and Stroebel, Johannes and Wong, Jun, Lender Automation and Racial Disparities in Credit Access (November 11, 2022). Available at SSRN: https://ssrn.com/abstract=3939384 or http://dx.doi.org/10.2139/ssrn.3939384

Sabrina T Howell (Contact Author)

Harvard Business School ( email )

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue Cambridge, MA 02138 United States

Theresa Kuchler

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions 20 Cooper Square 3rd Floor New York, NY 10003-711 United States

David Snitkof

Ocrolus ( email )

101 Greenwich St New York, NY 10006 United States

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street Suite 9-160 New York, NY NY 10012 United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue Cambridge, MA 02138 United States

Centre for Economic Policy Research (CEPR) ( email )

London United Kingdom

Jun Wong

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions 20 Cooper Square 3rd Floor New York, NY 10003-711 United States

Download This Paper

Open PDF in Browser

Do you have a job opening that you would like to promote on SSRN?

Place Job Opening

Paper statistics

Downloads

2,096

Abstract Views

21,955

Rank

17,741

12 Citations

79 References

PlumX Metrics

Related eJournals

- Macroeconomics: Monetary & Fiscal Policies eJournal Follow Macroeconomics: Monetary & Fiscal Policies eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 1,512 PAPERS 20,591
- Discrimination, Law & Justice eJournal Follow Discrimination, Law & Justice eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 1,221 PAPERS 19,348 This Journal is curated by: Francisco Valdes at University of Miami - School of Law Entrepreneurship & Finance eJournal Follow Entrepreneurship & Finance eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 1,216 PAPERS 8,218 Entrepreneurship & Law eJournal Follow Entrepreneurship & Law eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 1,094 PAPERS 18,838 Health Economics eJournal Follow Health Economics eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 607 PAPERS 19,575 Economic Anthropology eJournal Follow Economic Anthropology eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 586 PAPERS 9,267 Development Economics: Regional & Country Studies eJournal Follow Development Economics: Regional & Country Studies eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 562 PAPERS 29,171 Microeconomics: Intertemporal Firm Choice & Growth, Investment, Financing, & Capacity eJournal Follow Microeconomics: Intertemporal Firm Choice & Growth, Investment, Financing, & Capacity eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 553 PAPERS 7,239 Race & Social Inequity eJournal Follow Race & Social Inequity eJournal Subscribe to this free journal for more curated articles on this topic FOLLOWERS 508 PAPERS 3,547 Monetary Economics: Financial System & Institutions eJournal Follow Monetary Economics: Financial System & Institutions eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 495 PAPERS 13,301 Economic & Social Impacts of Innovation eJournal Follow Economic & Social Impacts of Innovation eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 333 PAPERS 2,871 Economics of Innovation eJournal Follow Economics of Innovation eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 313 PAPERS 24,667 New York University Stern School of Business Research Paper Series Follow New York University Stern School of Business Research Paper Series Subscribe to this free journal for more curated articles on this topic FOLLOWERS 230 PAPERS 3,456 This Journal is curated by: Office of Faculty Affairs at New York University (NYU) - Leonard N. Stern School of Business Sociology of Innovation eJournal Follow Sociology of Innovation eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 212 PAPERS 6,644 Economic Sociology eJournal Follow Economic Sociology eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 99 PAPERS 5,429 Social Stratification, Social Mobility & Inequality eJournal Follow Social Stratification, Social Mobility & Inequality eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 58 PAPERS 2,704 Political Economy - Development: Health eJournal Follow Political Economy - Development: Health eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 48 PAPERS 15,206 Medical & Mental Health Sociology eJournal Follow Medical & Mental Health Sociology eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 38 PAPERS 3,613 Anthropology of Race, Ethnicity & Indigenous People eJournal Follow Anthropology of Race, Ethnicity & Indigenous People eJournal Subscribe to this fee journal for more curated articles on this topic FOLLOWERS 16 PAPERS 5,477

Feedback

Feedback to SSRN

File and source

File

papers.cfm_fbaa487f5b3568ca_wayback.html

Size

101,123 bytes

SHA-256

d69b42a67c1a1de2db40e0df16a983817b6281b69abbb7ad0b01611582b47ed9

Our copy

papers.cfm_fbaa487f5b3568ca_wayback.html

Original

papers.ssrn.com