Disaster Lending: “Fair” Prices but “Unfair” Access

We find the Small Business Administration’s disaster-relief home loan program denies significantly more loans in areas with larger shares of minorities, subprime borrowers, and higher income inequality. We find that risk-insensitive loan pricing, a feature present in many regulated and government-run lending programs, is an important driver of these disparities in access to credit. The differences in denial rates are disproportionately high compared with private-market lending and government-insured risk-sensitive loan pricing programs. Thus, despite ensuring “fair” prices, the use of risk-insensitive pricing may lead to “unfair” access to credit. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.03199 .

• 저널Management Science · 70(12) · 8484–8505
• 토픽Financial Literacy, Pension, Retirement Analysis · Accounting
• DOI10.1287/mnsc.2021.03199
• 저자Taylor A. Begley, Umit G. Gurun, Amiyatosh Purnanandam, Daniel Weagley