Self-Reporting Race in Small Business Loans: A Game-Theoretic Analysis of Evidence from PPP Loans in Durham, NC
AbstractUsing hand-collected race information about small business owners that concealed their race in Paycheck Protection Program applications, we find evidence that not disclosing race information in loan applications pays off significantly. Our results show that Black-owned businesses that concealed their race obtained 52 percent more in funding than self-reported Black-owned businesses. Interestingly, White-owned businesses that also concealed their race information obtained approximately 10 percent more in funding relative to self-reported White-owned businesses. However, the effect is not statistically significant. Our findings are consistent with a prisoner's dilemma theoretical framework in which all participants are better off by not self-reporting race.
CitationGarcía, Raffi E., and William A. Darity Jr. 2022. "Self-Reporting Race in Small Business Loans: A Game-Theoretic Analysis of Evidence from PPP Loans in Durham, NC." AEA Papers and Proceedings, 112: 299-302. DOI: 10.1257/pandp.20221031
- D22 Firm Behavior: Empirical Analysis
- E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- L25 Firm Performance: Size, Diversification, and Scope