'Let Us Put Our Moneys Together:' Minority-Owned Banks and Resilience to Crises

56 Pages Posted: 30 Sep 2022 Last revised: 29 Feb 2024

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business

Maryann Feldman

Arizona State University (ASU)

W. Scott Langford

School of Public Affairs - Arizona State University

Raluca A. Roman

Federal Reserve Bank of Philadelphia

Date Written: February 28, 2024

Abstract

Racial and ethnic minorities disproportionately suffer more severe consequences during economic downturns, having heightened vulnerability in employment and credit. We investigate the role of minority-owned banks in mitigating these challenges, focusing on shared borrower-lender identity, and analyzing how these minority-owned banks affect employment through the Global Financial Crisis and the COVID-19 Crisis. Using multiple econometric specifications including propensity score matching and instrumental variables, our study reveals that communities with higher minority-owned bank market shares experience fewer employment declines through the two crises, thus exhibiting greater resilience. These banks achieve this by increasing lending to small businesses and households during crises. By addressing financial constraints, particularly for minority-owned businesses and households, minority-owned banks contribute to economic resilience, bridging racial gaps, and fostering community employment during times of crisis.

Keywords: minority-owned banks, minorities, shared identity, minority employment, bank credit, crises, economic resilience

JEL Classification: G01, G21, O12, J15, J21

Suggested Citation

Berger, Allen N. and Feldman, Maryann and Langford, W. Scott and Roman, Raluca A., 'Let Us Put Our Moneys Together:' Minority-Owned Banks and Resilience to Crises (February 28, 2024). Available at SSRN: https://ssrn.com/abstract=4231594 or http://dx.doi.org/10.2139/ssrn.4231594

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene St.
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Maryann Feldman

Arizona State University (ASU)

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

W. Scott Langford

School of Public Affairs - Arizona State University ( email )

411 N Central Ave #750
Phoenix, AZ 85004
United States
2527176016 (Phone)

HOME PAGE: http://www.scottlangford.us/

Raluca A. Roman (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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