Profiting from Protecting Small Business Borrowers: Take that to the Bank!

10 Pages Posted: 28 Jul 2020

See all articles by Jerome Williams

Jerome Williams

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

Sterling Bone

Utah State University - Huntsman School of Business

Glenn Christensen

Brigham Young University - Department of Business Management

Alexandra Tebbs

Utah State University

Date Written: July 24, 2020

Abstract

While small businesses represent a significant portion of the economy, there is mounting evidence that the playing field is not level for these firms in access to capital. Based on 10 years of matched-paired mystery shopping tests in banks to investigate bank lending practices and customer experience, the results demonstrate that in almost every instance, minorities were treated more poorly than their White counterparts. However, the authors acknowledge the controversy surrounding this issue, as some question the need for government action to push banks in this direction. Before offering evidence of the impact race can have on the treatment of small business owners who apply for loans, they present two frameworks which support the adoption of race-based criteria in evaluating bank performance, namely, Corporate Social Responsibility and Corporate Social Innovation. They then provide a summary of the results of mystery shopping studies they have conducted, concluding that banks are leaving profits on the table through their discriminatory practices.

Keywords: CSR, social responsibility, ethics

Suggested Citation

Williams, Jerome and Bone, Sterling and Christensen, Glenn and Tebbs, Alexandra, Profiting from Protecting Small Business Borrowers: Take that to the Bank! (July 24, 2020). Rutgers Business Review, Vol. 5, No. 2, 2020, pp.226-235. , Available at SSRN: https://ssrn.com/abstract=3660195

Jerome Williams (Contact Author)

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

1 Washington Park
Newark, NJ 07102
United States

Sterling Bone

Utah State University - Huntsman School of Business ( email )

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

Glenn Christensen

Brigham Young University - Department of Business Management ( email )

Provo, UT 84602
United States
(801) 422-1773 (Phone)

Alexandra Tebbs

Utah State University ( email )

Logan, UT 84322
United States

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