Lender Automation and Racial Disparities in Credit Access

Previously circulated as “Automation and Racial Disparities in Small Business Lending: Evidence from the Paycheck Protection Program”. This paper subsumes results in an earlier note from December 2020 titled “Which lenders had the highest minority share among their Payment Protection Program (PPP) loans?” We are grateful to Georgij Alekseev, Sara Gong, and Cangyuan Li for superb research assistance, and to Enigma, Middesk, Lendio, Biz2Credit, and Ocrolus for sharing part of their data. In particular, we thank Scott Monaco at Ocrolus for his insights and analytical work. We are also grateful for help from Sriya Anbil, Rohit Arora, Venkatesh Bala, Brock Blake, Katherine Chandler, Christine Dobridge, Kyle Mack, Karen Mills, David Musto, Hicham Oudghiri, Madeline Ross, Kurt Ruppel, and Sam Taussig. We thank seminar and conference participants at the NBER, the AFA Meetings, Cornell, Chicago Booth, Princeton, Maryland Smith, Arizona State University, the Government Accountability Office, Northeastern University, the Boston Fed, the Virtual Corporate Finance Seminar, NYU, the NY State Department of Financial Services, and the University of Georgia as well as Michael Faulkender and the reviewing team at the Journal of Finance (the editor Amit Seru, as well as an associate Editor and multiple anonymous referees) for their helpful comments. Howell’s work on this project is funded by the Kauffman Foundation. Snitkof is an employee and Howell an unpaid contractor at Ocrolus, which provided some data for the project. There are no further relevant financial or other conflicts of interest to disclose.

• October 5, 2021
• November 22, 2021
• February 7, 2022
• May 2, 2022