Money & Race: Black Women Have A Better Chance Of Getting A Bank Loan These Days

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August 15, 2013 ‐ By Ann Brown

This is somewhat surprising, but definitely good news. According to a new study, it is easier for African-American women to get bank loans. Lenders view them as “as single mothers industrious and hardworking,” reports Red Orbit. (The single mothers throws us a little, but okay…)

The study by University of Iowa sociologist Sarah Harkness, found that money lenders perceive African-American women just as favorably as white males, and would lend them as much money.

Harkness says she will unveil her study, titled “Status Effects in Lending Markets: The Importance of Gender and Race,” at the 108th Annual Meeting of the American Sociological Association.

The study used previous research that suggested lending markets usually work against certain groups. “Evidence shows that disparities in funding outcomes are partially due to the actions of lenders,” stated Harkness in the study. “I wanted to know what borrower characteristics lenders were picking up on.”

So Harkness tested the theory. She gathered hundreds of undergraduate students and alumni from West Coast universities and then gave them a hypothetical $1,000 and asked them to look at fictional loan applications and determine how much money to loan. She varied the gender, race, and education level of applicants; their financial profile, however, was the same.

“As predicted, the study showed that education factored prominently into how lenders viewed borrowers and thus their decision to lend,” reports Red Orbit. Still, “it didn’t wipe out the impact of gender and race,” says Harkness. There were consistent cultural stereotypes that influenced how much money the study participants were willing to lend.

African-American men, for example, were seen as least competent and received the least amount of funding; white women followed. The “lenders” commented that they held these two groups to a harsher standard, and looked at them more negatively. “This meant being less forgiving of small errors such as typos. It also meant making unfavorable assumptions about the nature of the applicants’ employment (whether it was temporary versus permanent, for example) and their level of intelligence,” reports Red Orbit.

African-American females and white males were looked upon in a mostly positive manner. “There was an assumption that the African-American woman was on her own raising a family and was, therefore, a motivated, hardworking, and self-confident breadwinner,” Harkness explains.

There was the preconceived notion that a African-American female would do her best to repay the loan. The white female borrower, by contrast,  was seen as distrustful by the lenders.

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