Shedding Light on Bias: Consumer Complaint Disclosure and Racial Equity in Financial Services 

Abstract

This study investigates how the public disclosure of consumer complaint narratives in 2015 by the Consumer Financial Protection Bureau affects racial disparities in financial services. Using triple-difference estimation, we show that minority consumers receive better treatment from financial institutions under CFPB supervision after the disclosure. These improvements manifest as higher deposit rates and lower fees in savings markets, and reduced rates for auto loans and credit cards in lending markets. Financial institutions receiving discriminatory complaints face deposit outflows. Our evidence demonstrates the broad impact of service quality disclosure in reducing racial inequalities across both savings and lending markets.

Keywords: Disclosure, Racial disparities, Financial services

JEL Classification: G28, J15, D14