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A University of Iowa study suggests that African-American women have great odds of obtaining loans from lenders, and their rate of success is comparable to that of White men. According to sociologist Sarah Harkness, Black women are getting the loans because lenders see the group as mostly hard-working and trustworthy.
Harkness presented her study this morning at the annual conference for the American Sociological Association in New York. The study uses older data that showed markets for lending worked against various groups in certain markets.
"Evidence shows that disparities in funding outcomes are partially due to the actions of lenders," said Harkness, an assistant professor in sociology at the University of Iowa. "I wanted to know what borrower characteristics lenders were picking up on."
Harkness tested her theory by gathering hundreds of undergraduate students and alumni from West Coast institutions, many of whom work in banking and finance. Giving them a hypothetical $1,000 to loan out, the group pored over applications to figure out how much they would loan. Parameters within the group were marked by education, race, age but with similar financial profiles.
The data showed that lenders viewed education as most important but gender and race figured prominently, too. Black men ranked lowest in obtaining loans followed by White women. Lenders cited typos and employment history discrepancies as the main reasons why those two groups ranked low.
In a shocking development, Black women and White men fared far better and Harkness offered her take: "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," she stated.
Lenders said in comments that African-American women had more of their trust and would work harder to repay loans. White women were viewed as the most distrustful of the groups reviewed. Harkness did offer that overall, small errors such as typos and grammatical mistakes lowered chances for all involved.