Credit Availability for Minority Business Owners in an Evolving Credit Environment

Article Business

Discrimination in lending? Evidence from the Paycheck Protection Program

Rachel Atkins et al.

Summary: Our research found that Black-owned businesses received PPP loans that were approximately 50% lower than loans received by White-owned businesses with similar characteristics. However, this disparity decreased over time as non-bank lenders like fintechs were allowed to participate, and the differences were slightly smaller in areas with more bank branches. These results align with previous studies demonstrating lending discrimination by commercial banks against Black borrowers and suggest that increasing access and competition among lenders can help reduce disparities.

SMALL BUSINESS ECONOMICS (2022)

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Article Business, Finance

Can FinTech reduce disparities in access to finance? Evidence from the Paycheck Protection Program

Isil Erel et al.

Summary: The study finds that FinTech is predominantly used in areas with fewer bank branches, lower incomes, and more minority households, as well as in industries with fewer banking relationships. It is also more popular in counties heavily affected by the economic impact of the COVID-19 pandemic. Interestingly, FinTech has a limited substitution effect on traditional banks, primarily expanding the supply of financial services.

JOURNAL OF FINANCIAL ECONOMICS (2022)

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Article Development Studies