Testing for racial bias in business credit scores

Journal Article (Journal Article)

We develop a novel empirical test of racial bias based on comparisons between forward-looking, expectations-based credit scores and backward-looking, repayment-history-based credit scores. We then test for racial bias using confidential-access data from the Kauffman Firm Survey. Businesses founded by disadvantaged minorities have much lower average business credit scores, but these scores show no evidence of racial bias. If anything, forward-looking credit-score models under-predict the rate of payment delinquency among minority-owned businesses.

Full Text

Duke Authors

Cited Authors

  • Robb, A; Robinson, DT

Published Date

  • March 1, 2018

Published In

Volume / Issue

  • 50 / 3

Start / End Page

  • 429 - 443

Electronic International Standard Serial Number (EISSN)

  • 1573-0913

International Standard Serial Number (ISSN)

  • 0921-898X

Digital Object Identifier (DOI)

  • 10.1007/s11187-017-9878-2

Citation Source

  • Scopus