Study Finds Persisting Racial Inequality in Access to Financial Services and Credit

A new study by the Brookings Institution finds that access to capital for individuals and business owners continues to be uneven for racial and ethnic groups in the United States. At the local level, the study finds that there are stark contrasts in access to credit for African Americans: Interest rates on business loans, bank branch density, local banking concentration in the residential mortgage market, and the growth of local businesses are markedly different in majority Black neighborhoods.

From 2010 to 2021, the U.S. lost over 15,500 bank branches. By 2021, majority Black census tracts were much less likely to have a bank branch than non-majority Black neighborhoods. Blacks are more likely than Whites to depend on high interest financial services like check cashing counters and payday lenders because there are fewer banks in Black neighborhoods.

African Americans also have lower access to mortgage lenders and financial institutions that provide small business loans. And Blacks are still significantly less likely that Whites to be approved for mortgages and small business loans, even when their creditworthiness is the same of Whites applying for credit..

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