Using Technology to Tackle Discrimination in Lending: The Role of Fintechs in the Paycheck Protection Program

Rachel M.B. Atkins, Lisa Cook and Robert Seamans

AEA Papers and Proceedings, 2022, vol. 112, 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.

JEL-codes: E63 G21 G23 G28 J15 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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DOI: 10.1257/pandp.20221030

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