African-American women, who have long complained of the negative impact of predatory lending, appear to be coveted candidates when it comes to getting loans, according to a study by researchers at the University of Iowa.
The study, called "Status Effects in Lending Markets: The Importance of Gender and Race," indicates that lenders perceive African-American women as favorably as they do white males. Lenders, the report says, are inclined to lend Black women sums equal to what they would lend white men.
“The reason: African-American females are generally perceived as single mothers who are industrious and hardworking,” the report states.
The research report was presented Tuesday at the American Sociological Association annual meeting in New York. It was conducted by Sarah Harkness, a sociologist at the University of Iowa.
The study is based on past research suggesting that lending markets tend to work against certain groups. “Evidence shows that disparities in funding outcomes are partially due to the actions of lenders,” Harkness said. “I wanted to know what borrower characteristics lenders were picking up on.”

The report's results are particularly striking because Black women have long complained of being at the bottom of the list of desirable prospects for lenders. Predatory lending and discrimination have been the focus of years of complaints from Black women and men on lending practices.
Harkness said she decided to test her theory by assembling hundreds of undergraduate students and alumni from West Coast universities, some of whom were in the banking or financial industries. Harkness then gave the participants a hypothetical $1,000 and asked them to look at fictional loan applications and determine how much money to loan. The gender, race and education of applicants varied, but their financial profile was the same.
The report indicated that education factored prominently into how lenders viewed borrowers and thus their decision to lend. However, “It didn’t wipe out the impact of gender and race,” Harkness said. She added that some cultural stereotypes consistently influenced how much money the study participants were willing to lend.
For example, African-American men were viewed as least competent and received the least amount of funding, followed by white women.

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(Photo: Jonathan Newton/The Washington Post/Getty Images)