Lender Automation and Racial Disparities in Credit Access
93 Pages Posted: 11 Oct 2021 Last revised: 2 Jan 2023
Sabrina T. Howell
New York University (NYU) - New York University
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
University of Chicago
Date Written: October 2021
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.
Suggested Citation: Suggested Citation
Sabrina T. Howell (Contact Author)
New York University (NYU) - New York University
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
Do you have a job opening that you would like to promote on SSRN?
Paper statistics
Related eJournals
-
NBER Working Paper Series
Subscribe to this free journal for more curated articles on this topic
FOLLOWERS12,376PAPERS31,314 -
Ewing Marion Kauffman Foundation Research Paper Series
Ewing Marion Kauffman Foundation Research Paper Series
Subscribe to this free journal for more curated articles on this topic
FOLLOWERS3,497PAPERS4,974This Journal is curated by:Jessica Looze at Ewing Marion Kauffman Foundation -
Corporate Finance: Capital Structure & Payout Policies eJournal
Corporate Finance: Capital Structure & Payout Policies eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS2,656PAPERS14,646This Journal is curated by:René M. Stulz at Ohio State University (OSU) - Department of Finance -
Regulation of Financial Institutions eJournal
Regulation of Financial Institutions eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,684PAPERS11,119This Journal is curated by:René M. Stulz at Ohio State University (OSU) - Department of Finance -
Macroeconomics: Monetary & Fiscal Policies eJournal
Macroeconomics: Monetary & Fiscal Policies eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,575PAPERS18,487 -
Entrepreneurship & Finance eJournal
Entrepreneurship & Finance eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,289PAPERS6,862 -
Discrimination, Law & Justice eJournal
Discrimination, Law & Justice eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,253PAPERS17,211This Journal is curated by:Francisco Valdes at University of Miami - School of Law -
Political Economy: Fiscal Policies & Behavior of Economic Agents eJournal
Political Economy: Fiscal Policies & Behavior of Economic Agents eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,181PAPERS4,286 -
Entrepreneurship & Law eJournal
Entrepreneurship & Law eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,165PAPERS13,348 -
Regulation of Financial Institutions eJournal
Regulation of Financial Institutions eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,161PAPERS10,603This Journal is curated by:Howell E. Jackson at Harvard Law School -
IO: Productivity, Innovation & Technology eJournal
IO: Productivity, Innovation & Technology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS1,067PAPERS29,731 -
Microeconomics: Welfare Economics & Collective Decision-Making eJournal
Microeconomics: Welfare Economics & Collective Decision-Making eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS772PAPERS17,681 -
Cultural Anthropology eJournal
Cultural Anthropology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS641PAPERS38,375 -
Economic Anthropology eJournal
Economic Anthropology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS621PAPERS8,463 -
Health Economics eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS614PAPERS18,170 -
Microeconomics: Intertemporal Firm Choice & Growth, Investment, Financing, & Capacity eJournal
Microeconomics: Intertemporal Firm Choice & Growth, Investment, Financing, & Capacity eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS577PAPERS7,153 -
Monetary Economics: Financial System & Institutions eJournal
Monetary Economics: Financial System & Institutions eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS507PAPERS10,319 -
Social & Personality Psychology eJournal
Social & Personality Psychology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS141PAPERS12,022 -
Industrial & Organizational Psychology eJournal
Industrial & Organizational Psychology eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS116PAPERS4,454 -
Social Stratification, Social Mobility & Inequality eJournal
Social Stratification, Social Mobility & Inequality eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS55PAPERS1,382 -
Political Economy - Development: Health eJournal
Political Economy - Development: Health eJournal
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS54PAPERS14,516