Automation can reduce disparities in loan approvals

The Paycheck Protection Program included guidance from the SBA to prioritize loans to businesses owned by socially and economically disadvantaged individuals. Yet an October 2021 research paper, published by a group of New York University professors, found a disparity in the approval of PPP loans to Black-owned businesses. These differences in approval rates are not explained by factors like pre-existing bank relationships or applicant behavior. The paper’s authors suggest that preference-based discrimination occurs — and automation can make lending more equitable . . .

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