Shaping Small Business Lending Policy Through Matched-Paired Mystery Shopping

30 Pages Posted: 15 Sep 2017 Last revised: 25 Mar 2018

Sterling Bone

Utah State University - Huntsman School of Business

Glenn Christensen

Brigham Young University

Jerome Williams

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Stella Adams

National Community Reinvestment Coalition (NCRC)

Anneliese Lederer

National Community Reinvestment Coalition (NCRC)

Paul Lubin

Lubin Research

Date Written: September 12, 2017

Abstract

With limited financial sophistication, entrepreneurial consumers approach the financial marketplace more like retail financial consumers than business customers. However, the assumption of both legislators and regulators is that business-borrowers are more financially savvy than consumer-borrowers, and thus do not require as broad-reaching protections. This gap between marketplace policy protections and the lived reality of the vast majority of small business entrepreneurs sets the stage for entrepreneurial consumers to fall through the regulatory cracks and sets the stage for possible exploitation and abuse. This situation is potentially exacerbated for minority entrepreneurs who belong to protected classes that are generally more vulnerable to exploitation in the marketplace including the small business lending marketplace. In this paper, we highlight the current state of this policy gap in the marketplace relative to minority entrepreneurial consumers and present a matched-paired mystery shopping study that demonstrates the critical need for reliable, primary data to inform regulatory agencies as they work to implement available protections to ensure equal access to credit within the small business lending marketplace.

Keywords: fair lending, small business, discrimination, social justice

Suggested Citation

Bone, Sterling and Christensen, Glenn and Williams, Jerome and Adams, Stella and Lederer, Anneliese and Lubin, Paul, Shaping Small Business Lending Policy Through Matched-Paired Mystery Shopping (September 12, 2017). Available at SSRN: https://ssrn.com/abstract=3035972 or http://dx.doi.org/10.2139/ssrn.3035972

Sterling Bone (Contact Author)

Utah State University - Huntsman School of Business ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States

Glenn Christensen

Brigham Young University ( email )

Provo, UT 84602
United States

Jerome Williams

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

1 Washington Park
Newark, NJ 07102
United States

Stella Adams

National Community Reinvestment Coalition (NCRC) ( email )

727 15th Street, NW, Suite 900
Washington, DC 20005
United States

Anneliese Lederer

National Community Reinvestment Coalition (NCRC) ( email )

727 15th Street, NW, Suite 900
Washington, DC 20005
United States

Paul Lubin

Lubin Research ( email )

Delray Beach, FL 33446
United States
561-404-0398 (Phone)

HOME PAGE: http://www.lubinresearch.com

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