Love & Loans The Effect of Race, Beauty and Personal Characteristics in Credit Markets

Enrichetta Ravina

No 20154, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: I find that beauty, race, age, and personal characteristics affect lender decisions, once credit quality, employment history, homeownership, and other hard financial information are accounted for. Beautiful applicants are 1.54% more likely to get a loan, pay similar interest rates than average- looking borrowers, but default more often, consistent with taste-based discrimination. Blacks are significantly less likely to get a loan (-2.3%), pay higher rates than Whites, but are more likely to default, consistent with statistical discrimination. Blacks with more highly racially prejudiced lenders face lower funding probability and higher rates, despite having similar default probabilities as other applicants.

Date: 2025-04
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