AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Using Technology to Tackle Discrimination in Lending: The Role of Fintechs in the Paycheck Protection Program
AEA Papers and Proceedings
vol. 112,
May 2022
(pp. 296–98)
Abstract
We assess the role of fintech firms in loans made through the Paycheck Protection Program (PPP), a US government policy response to the COVID-19 pandemic that provided loans to small businesses. We argue that fintech firms' reliance on technology rather than relationship-banking approaches used by traditional banks helps to address discrimination in lending, at least in part. Using newly released data on the PPP program, we find support for our arguments: while Black-owned businesses received loans that were approximately 50 percent lower than observationally similar White-owned businesses, the effect narrows considerably when fintechs are allowed to provide loans.Citation
Atkins, Rachel M.B., Lisa Cook, and Robert Seamans. 2022. "Using Technology to Tackle Discrimination in Lending: The Role of Fintechs in the Paycheck Protection Program." AEA Papers and Proceedings, 112: 296–98. DOI: 10.1257/pandp.20221030Additional Materials
JEL Classification
- E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- G28 Financial Institutions and Services: Government Policy and Regulation
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination