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Minority Banks during the COVID-19 Pandemic

Author

Listed:
  • Sophia M. Friesenhahn
  • Simon H. Kwan

Abstract

The COVID-19 pandemic disproportionately affected the health and financial well-being of communities of color. Over the past year, minority banks that specialize in providing financial services to underserved communities and minority borrowers have also performed significantly worse than other banks of similar size. Minority banks projected higher loan losses and had lower profits than nonminority banks. To the extent that underperforming minority banks may be more reluctant to expand lending—whether to avoid risk or minimize regulatory scrutiny—it could further exacerbate the unevenness of the recovery.

Suggested Citation

  • Sophia M. Friesenhahn & Simon H. Kwan, 2021. "Minority Banks during the COVID-19 Pandemic," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2021(20), pages 01-05, August.
    • Handle: RePEc:fip:fedfel:92933
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    Keywords

    covid-19; pandemic;

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