Revealing and Mitigating Racial Bias and Discrimination in Financial Services

Three field studies and a laboratory experiment reveal racial discrimination in financial loan services. The results show that (1) service employees provide Black (vs. White) customers with inferior service outcomes (i.e., products offered), (2) Black (vs. White) customers experience inferior servic...

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Bibliographic Details
Published inJournal of marketing research Vol. 61; no. 4; pp. 598 - 618
Main Authors Scott, Maura L., Bone, Sterling A., Christensen, Glenn L., Lederer, Anneliese, Mende, Martin, Christensen, Brandon G., Cozac, Marina
Format Journal Article
LanguageEnglish
Published Los Angeles, CA SAGE Publications 01.08.2024
SAGE PUBLICATIONS, INC
Subjects
Customer services
Employees
Racial discrimination
race
ethnicity
bias
discrimination
financial services
banking
public policy
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Summary:Three field studies and a laboratory experiment reveal racial discrimination in financial loan services. The results show that (1) service employees provide Black (vs. White) customers with inferior service outcomes (i.e., products offered), (2) Black (vs. White) customers experience inferior service processes (employees’ warmth/competence), and (3) Black (vs. White) customers report lower loyalty intentions toward the firm. Such discrimination is not only morally wrong and illegal; it is also bad for business. Therefore, the authors also show when and why racial discrimination is mitigated: namely, when Black customers signal higher socioeconomic status, or a Black customer's company (for which they seek the loan) has a more complex and sophisticated legal structure (corporation vs. sole proprietorship). Exploring this mitigation effect further, the authors show that a more sophisticated business structure increases the employee's trust toward Black customers, which reduces the perceived default likelihood and increases the likelihood to offer a loan; yet, this process does not emerge for White applicants. The findings point to managerial and policy implications to mitigate racial discrimination.
ISSN:0022-2437
1547-7193
DOI:10.1177/00222437231176470