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Finance, Advertising, and Race

Author

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  • Claire Célérier
  • Purnoor Tak

Abstract

We study how bank advertising practices contribute to racial disparities in financial markets by steering minorities toward inferior products. We exploit a regulatory change that incentivizes deposit collection at the Freedman’s Savings Bank, the first institution to collect deposits from African Americans post-Emancipation, by facilitating misuse of depositor funds. After deregulation, advertising volume rises, particularly in African American newspapers, leading to increased deposits from Black depositors despite the bank’s insolvency. We identify persuasion as a key mechanism; prescriptive stereotypes and false claims likely amplify advertising’s impact on African Americans, exacerbating historically large depositor losses after the bank’s collapse.

Suggested Citation

  • Claire Célérier & Purnoor Tak, 2025. "Finance, Advertising, and Race," The Review of Financial Studies, Society for Financial Studies, vol. 38(11), pages 3149-3204.
    • Handle: RePEc:oup:rfinst:v:38:y:2025:i:11:p:3149-3204.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhaf038
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913

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