the colorblind crowd founder race and performance in crowdfunding the dearth of minority entrepreneurs has received increasing media attention but few academic analyses in particular the funding process creates challenges for either audit or correspondence methods making it difficult to assess the role or type of discrimination influencing resource providers we use a novel approach that combines analyses of 7 617 crowdfunding projects with an experimental design to identify whether african american men are discriminated against and whether this reflects statistical taste based or unconscious bias on the part of prospective supporters we find that african american men are significantly less likely than similar white founders to receive funding and that prospective supporters rate identical projects as lower in quality when they believe the founder is an african american male we conclude that the reduction in perceived quality does not reflect conscious assumptions of differences in founder ability or disamenity but rather an unconscious assumption that black founders are lower quality in two additional experiments we identify three means of reducing this bias through additional evidence of quality via third party endorsements i e awards evidence of prior support through evidence that african american founders have succeeded previously and by removing indicators of the founder s race the online appendix is available at https doi org 10 1287 mnsc 2017 2774 this paper was accepted by toby stuart entrepreneurship and innovation

borrowing constraints and credit demand in a developing economy summary this paper investigates the determinants of credit demand in the presence of borrowing constraints in a developing economy we model the determinants of observed debt for chilean households while accounting for selection bias and the endogeneity of their income and specific household assets using a novel chilean dataset we estimate the relationship between household characteristics and consumer and mortgage debt we find substantial differences in the nature of these relationships across the types of debt for example we find that the income elasticity for consumer debt is greater than 1 whereas for mortgage debt it is not the results suggest the increased availability of credit combined with the aging of the chilean population is likely to drastically change the distribution and level of chilean debt these findings are particularly relevant for other developing economies currently experiencing rapid income and debt growth copyright 2015 john wiley sons ltd

screening incentives and privacy protection in financial markets a theoretical and empirical analysis we study a model in which firms offer financial products to individuals post prices for their products and screen consumers who apply to purchase them any information obtained in the screening process may be traded to another firm selling related products we show that firms ability to sell consumer information can lead to lower prices higher screening intensities and increased social welfare by exploiting variations in the adoption of local financial privacy ordinances in five california bay area counties we are able to provide simple estimates of the effects of stricter financial privacy laws on mortgage denial rates during 2001 2006 consistent with the model s predictions denial rates for home purchase loans and refinancing loans decreased in counties where opt in privacy ordinances were adopted moreover estimated foreclosure start rates during the financial crisis of 2007 2008 were higher in counties where the privacy ordinance was adopted

beyond bankruptcy does the us bankruptcy code provide a fresh start to entrepreneurs abstract this paper assesses the extent to which the us bankruptcy system is effective in providing small businesses a fresh start after a bankruptcy filing i use data from the 1993 1998 and 2003 national survey of small business finances to explore how firms fare after a bankruptcy filing on the positive side previously bankrupt firms are not any more burdened than the average small firm by problems relating to profitability cash flow health insurance costs or taxes further the fact that these firms are surviving several years after the filing is itself a testament to the efficient functioning of the us bankruptcy system it suggests that the bankruptcy system goes a long way toward helping businesses recover after a bankruptcy filing however the one area of concern that persists after a filing is financing or credit access in general these firms have a nearly 24 percentage point higher likelihood of being denied a loan and are charged interest rates that are more than 1 percentage point higher than those charged to other businesses a bankruptcy affects all types of financing even trade credit which is a significant form of lending between businesses in fact it appears that firms with a bankruptcy record are rationed out of the market with all types of loans being denied at significantly higher rates than other firms further my results show that bankruptcy leads to a class of discouraged borrowers who are significantly less likely to even apply for a loan

missing miles evasion responses to car taxes abstract we study a tax evasion response to car taxes in finland where used car importers overstate the mileage to reduce tax liability first we develop a tax evasion measure by comparing reported mileage upon import with subsequent information from vehicle inspections and find that a decline in mileage missing miles occurs frequently second we analyze a tax rate increase and observe a reduction in the number of imported used cars but only among non evaders finally we analyze an rct informing some potential importers about a program of inspections that uncovers true odometer readings and the results suggest that third party reporting reduces evasion

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

market structure and discrimination the case of small businesses this paper examines bank market structure to draw inferences concerning the role of discrimination in credit markets for small businesses the authors analyze credit application and denial rates loans outstanding and interest rates across demographic groups this set of variables in combination with information on local bank market structure helps them distinguish among borrower preferences lender tastes and inadequate lender information as likely causes of differences in credit market experiences of small business operators from distinct demographic groups the authors find that white men and women can expect similar treatment in credit markets with some benefits to female owned firms located in concentrated banking markets minorities by contrast fare worse than whites moreover by appealing to becker s 1957 classic theories we find some clear evidence to support the view that prejudicial discrimination is at least partly to blame

lending to small businesses the role of loan maturity in addressing information problems we investigate what determines the maturity of lines of credit to small businesses our results provide strong support for the hypothesis that shorter loan maturities serve to mitigate the problems associated with borrower risk and asymmetric information that are typical of small business lending we find that maturity is shorter for firm owners that have poor credit histories are older and less experienced and for firms that are more informationally opaque supporting the notion that collateral and maturity are substitute mechanisms in mitigating agency problems we also find strong evidence that maturity increases with collateral pledges that personal collateral is associated with longer maturities than business collateral and that collateral types that better mitigate agency problems reduce the sensitivity of loan maturity to informational asymmetries and risk finally while it is argued that relationship lending may mitigate information asymmetry we find no relation between loan maturity and stronger firm creditor ties

race ethnicity and credit card marketing there is a vast literature on discrepancies in consumer credit related to race and ethnicity i explore a pattern that was first identified in aggregate data by han keys and li 2011 in their study of credit access blacks were approximately 27 less likely to receive offers from credit card lenders during the sample period even after controlling for variables such as credit history household income and local economic conditions hispanics were 17 less likely to receive an offer after including controls the discrepancy is robust to lender specific regressions and the inclusion of a large number of explanatory variables my findings imply that marketing is an important area for analysis of discrimination in consumer credit due to the likely need for confidential information in further analysis investigation by an appropriate regulatory agency such as the consumer financial protection bureau would be useful

no taxation without information deterrence and self enforcement in the value added tax abstract claims that the vat facilitates tax enforcement by generating paper trails on transactions between firms contributed to widespread vat adoption worldwide but there is surprisingly little evidence this paper analyzes the role of third party information for vat enforcement through two randomized experiments among over 400 000 chilean firms announcing additional monitoring has less impact on transactions that are subject to a paper trail indicating the paper trail s preventive deterrence effect this leads to strong enforcement spillovers up the vat chain these findings confirm that when taking evasion into account significant differences emerge between otherwise equivalent forms of taxation jel d83 h25 h26 k34 o17

gender and rural non farm entrepreneurship despite their increasing prominence in policy debates little is known about gender inequities in non agricultural labor market outcomes in rural areas using matched household enterprise community data sets from bangladesh ethiopia indonesia and sri lanka this paper documents and analyzes gender differences in the individual portfolio choice and productivity of non farm entrepreneurship except for ethiopia women are less likely than men to become nonfarm entrepreneurs women s nonfarm entrepreneurship isn t strongly correlated with household composition or educational attainment but is especially prevalent amongst women who are the head of their household female led firms are much smaller and less productive on average though gender differences in productivity vary dramatically across countries mean differences in log output per worker suggest that male firms are roughly 10 times as productive as female firms in bangladesh three times as those in ethiopia and twice as those in sri lanka by contrast no significant differences in labor productivity were detected in indonesia differences in output per worker are overwhelmingly accounted for by sorting by sector and size they can t be explained by differences in capital intensity human capital or the local investment climate nor by increasing returns to scale

releasing constraints to growth or pushing on a string policies and performance of mexican micro firms abstract using firm level data from mexico this paper investigates the firm characteristics associated with participation in credit markets access to training tax payments and membership in business associations we find that firms which participate in these institutions exhibit significantly higher profits moreover firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business but firms that received credit exhibit lower rates of income growth these results persist when firm characteristics that are arguably correlated with unobserved entrepreneurial ability are controlled for our findings suggest that the significant within country differences in firm productivity observed in developing economies are due in part to market and government failures that limit the ability of micro firms to reach their optimal sizes

affirmative action programs and business ownership among minorities and women affirmative action programs are commonly used as a means to level the playing field for minority and women owned firms in public procurement markets and therefore may be a positive factor in business entry and survival to the extent that affirmative action programs also apply to traditional labor markets however they may alter the opportunity cost of starting a business we utilize the elimination of affirmative action in california and washington states through voter initiatives to identify the effect of affirmative action on minority and female self employment rates in our base specifications we find evidence of modest increases in self employment among minorities and women in both california and washington after elimination of affirmative action consistent with the hypothesis that the opportunity cost of starting a business fell due to restricting opportunities in the traditional labor markets the sign of the estimated effect however is not uniformly positive when considering specific race gender groups and the statistical significance of the main results is somewhat sensitive to the choice of control states

volume volatility and new york stock exchange trading halts trading halts increase rather than reduce both volume and volatility volume volatility in the first full trading day after a trading halt is 230 percent 50 to 115 percent higher than following pseudohalts nonhalt control periods matched on time of day duration and absolute net of market returns these results are robust over different halt types and news categories higher posthalt volume is observed into the third day while higher posthalt volatility decays within hours the extent of media coverage is a partial determinant of volume and volatility following both halts and pseudohalts but a separate halt effect remains after controlling for the media effect in the wake of the 1987 market break a number of commentators including the presidential task force on market mechanisms recommended the establishment of circuit breaker mechanisms the primary argument supporting circuit breakers both price limits and trading halts is that nontrading periods provide an opportunity for normal information transmission in times of market duress proponents of circuit breakers claim that during major price changes there can be a breakdown in the transmission of information between the trading floor and market participants therefore the primary function of a circuit breaker should be to reinform participants greenwald and stein 1988 p 17 by lowering informational asymmetries between traders halts could permit the orderly emergence of a new consensus price but would informative trading halts succeed many academics are openly suspicious of any kind of market interference and assume that trading halts are guilty until proven innocent grossman 1990 p 3 for example argues that the closing of markets merely prevents consenting adults from carrying out their desires on the floor of the stock exchange not only do halts impose a liquidity cost on traders but studies suggest that information will not be as

excess sensitivity of consumption to current income liquidity constraints or myopia this paper asks whether the empirical rejection of the rational expectations permanent income hypothesis occurs because agents are myopic in the sense that the marginal propensity to consume out of transitory income is non zero or because some agents face liquidity constraints the finding that the estimate of the mpc out of transitory income is dramatically affected in both magnitude and statistical significance by the inclusion of a proxy for liquidity constraints suggests that liquidity constraints are an important part of the explanation of the observed excess sensitivity of consumption to current income la sensibilite excessive de la consommation au revenu courant contraintes sur la liquidite ou myopie ce memoire examine la question a savoir pourquoi l hypothese du revenu permanent avec anticipations rationnelles n est pas v6rifiee empiriquement est ce parce que les agents economiques sont myopes i e que leur propension marginale a consommer a partir de leur revenu transitoire n est pas nulle ou bien est ce que certains agents economiques font face a des contraintes sur leur liquidite le fait que l estimation de la propension marginale a consommer le revenue transitoire est affectee par l inclusion d une variable qui tente de capturer l importance des contraintes sur la liquidit6 tant dans l 6valuation de sa taille que dans sa signification statistique suggere que ces contraintes jouent un role important dans l explication de cette sensibilite excessive qu on observe de la consommation aux changements dans le niveau de revenu courant almost all the recent empirical tests of the rational expectations permanent income hypothesis re pih have rejected the hypothesis using a rich variety of data sets and estimation methods the empirical work indicates that the failure of the re pih is significant both statistically and quantitatively the null hypothesis in this empirical literature typically consists of the joint hypothesis that 1 agents expectations are formed rationally 2 desired consumption is determined by permanent income and 3 capital markets are perfect in the sense that agents can lend or borrow against 1 studies rejecting the re pih include blinder 1981 flavin 1981 hall and mishkin 1982 hayashi 1982 and sargent 1978 in his original paper hall 1978 did not reject the re pih decisively however flavin 1981 showed that with a minor alteration in the specification of the alternative hypothesis the re pih could be rejected using hall s test and data set bernanke 1981 studying panel data on automobile expenditures did not find evidence against the hypothesis for an extensive survey of the empirical literature on the rational expectations permanent income hypothesis see king 1983 canadian journal of economics revue canadienne d economique xviii no 1 february fevrier 1985 printed in canada imprime au canada 0008 4085 85 117 36 1 50 canadian economics association this content downloaded from 157 55 39 17 on wed 31 aug 2016 05 08 58 utc all use subject to http about jstor org terms

gender biases in bank lending lessons from microcredit in france the evidence on gender discrimination in lending remains controversial to capture gender biases in banks loan allocations we observe the impact on the applicants of a microfinance institution mfi and exploit the natural experiment of a regulatory change imposing a strict eur 10 000 loan ceiling on microcredit descriptive statistics indicate that the presence of the ceiling is associated both with bank mfi co financing and with harsher treatment of female borrowers to investigate causal links we develop an econometric approach that addresses the concerns of selection biases multicollinearity and endogeneity our empirical findings suggest that the change in the mfi s gender related attitude was triggered by banks through co financing hence we speculate that co financing pushes ceiling constrained mfis to import whatever biases in loan granting that the banks are prone to overall this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women s empowerment efforts made by mfis

how effective are trading pauses abstract exploiting nasdaq order book data and difference in differences methodology we identify the distinct effects of trading pause mechanisms introduced on us stock exchanges after may 2010 we show that the mere existence of such a regulation makes market participants behave differently in anticipation of a pause pauses enhance price discovery during the break but have adverse effects on price stability and liquidity after the pause we find that pauses ultimately do not cool off markets but cause extra volatility this implies a regulatory trade off between the protective role of trading pauses and their adverse effects on market quality

ghostbusting in detroit evidence on nonfilers from a controlled field experiment abstract many people who owe income tax fail to file a timely tax return in communication with these ghosts what messages from the tax authority are effective for eliciting a return this is the first study to address message content in communication with income tax nonfilers i assess the efficacy of messages related to penalty salience punishment probability compliance cost and civic pride by evaluating the response to experimental mailings distributed by detroit to 7142 suspected resident nonfilers the penalty salience message was the most effective relative to a basic mailing that requested a return penalty salience mailings that stated the statutory penalty for failing to file a return tripled response rates from 3 to 10 compliance cost mailings that enclosed a blank tax return and punishment probability mailings that stated the recipient s federal income also raised response rates relative to the basic mailing but civic pride mailings did not i investigate the impact of treatment mailings on the behavior of untreated neighbors and find no evidence of geographic network effects

does racial prejudice affect black entrepreneurship evidence exploiting spatial differences in prejudicial attitudes abstractthis article explores the relationship between racial prejudice towards blacks and the black white self employment rate gap and provides the first direct empirical evidence that racial prejudice negatively impacts black self employment particularly in high start up cost industries to perform this analysis i construct a measure of prejudicial attitudes using responses from the general social survey and estimate the relationship between self employment and this index using the american community survey i find that an amount of prejudice equal to the difference in least and most prejudiced census divisions increases the black white self employment rate gap in high start up cost industries by 10 4 16 8 depending upon whether parental self employment is controlled for and represents the entire impact of racial prejudice on the black white self employment rate gap additionally racial prejudice widens the black white self employment income gap by between 6 4 and 8 2 in my full specification d

taxpayer response to an increased probability of audit evidence from a controlled experiment in minnesota abstract in 1995 a group of 1724 randomly selected minnesota taxpayers was informed by letter that the returns they were about to file would be closely examined compared to a control group that did not receive this letter low and middle income taxpayers in the treatment group on average increased tax payments compared to the previous year which we interpret as indicating the presence of noncompliance the effect was much stronger for those with more opportunity to evade in fact the difference in differences is not statistically significant for those who do not have self employment or farm income and do not pay estimated tax surprisingly however the reported tax liability of the high income treatment group fell sharply relative to the control group

order flow and liquidity around nyse trading halts we study order f low and liquidity around nyse trading halts we find that market and limit order submissions and cancellations increase significantly during trading halts that a large proportion of the limit order book at the reopen is composed of orders submitted during the halt and that the market clearing price at the reopen is a good predictor of future prices depth near the quotes is unusually low around trading halts though specialists and0or f loor traders appear to provide additional liquidity at these times finally specialists appear to spread the quote prior to imbalance halts to convey information to market participants the costs and benef its associated with new york stock exchange trading halts are the subject of continuous debate the stated purpose of trading halts is to allow investors a chance to react to new information and to facilitate the orderly emergence of a new equilibrium price see e g nyse 1999 however little is known about the extent or nature of investor reactions to trading halts furthermore it is unclear whether these reactions support or confound attempts to reach a new equilibrium price to address these issues we use nonpublic nyse data on all superdot electronic orders to analyze the effects of trading halts on order f low spreads and the limit order book we also examine the relationships between the limit order book and the reopening price and between liquidity and post halt volatility information on order f low is an important missing element in the ongoing debate about the usefulness of trading halts one argument against trading halts is that they impede price formation because trading aggregates information that is distributed across market participants however submissions and cancellations of orders during a halt may provide an alternative source of information that combined with published indications of possible reopening prices may assist with price formation an argument in favor of trading halts is that when traders are given an opportunity to cancel orders

subprime consumer credit demand evidence from a lender s pricing experiment using a unique panel data set from a u k credit card company we analyze the interest rate sensitivity of subprime credit card borrowers in addition to all individual transactions and loan terms we have access to details of a randomized interest rate experiment conducted by the lender on existing inframarginal loans for the whole sample we estimate a statistically significant 3 4 reduction in monthly credit demand in response to a five percentage point increase in interest rates this aggregate response is small but it masks very interesting heterogeneity in the sample we find that only low risk borrowers who fully utilize their credit cards lower their credit demand significantly when faced with an increase in interest rates we also document that a five percentage point increase in interest rates generates significant additional revenue for the lender without inducing delinquency over a short horizon 2013 the author

racial differences in patterns of wealth accumulation making use of psid data for 1984 1989 and 1994 we examine race differences in patterns of asset accumulation our results indicate as expected that inheritances raise the rate of wealth accumulation of whites relative to that of african americans but while whites devote a greater share of their income to saving racial differences in saving rates are not significant once we control for income though our results may be period specific we also do not find evidence that the rate of return to capital is greater for whites than for african americans simulations suggest that african americans would have gained significant ground relative to whites during the period if they had inherited similar amounts saved at the same rate had comparable income levels and more speculatively had portfolios closer in composition to those of whites

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

does access to formal agricultural credit depend on caste summary this paper analyzes whether caste impedes access to formal agricultural credit in india credit is provided mainly through cooperative and commercial banks using national data we find that cooperative banks discriminate against lower caste borrowers and find weak evidence that commercial banks instead bias lending in their favor in accordance with affirmative action policies we compare the organizational structures of the two types of bank and explain discrimination by cooperative banks in terms of interest group capture at the district level by showing that discrimination takes place in those districts where higher castes dominate

can entrepreneurial activity be taught quasi experimental evidence from central america summary business training is a widely used development tool yet little is known about its impact we study the effects of such a business training program held in central america to deal with endogenous selection into the training program we use a regression discontinuity design exploiting the fact that a fixed number of applicants are taken into the training program based on a pre training score business training significantly increases the probability that an applicant to the workshop starts a business or expands an existing business results also suggest gender heterogeneity as well as the presence of financial constraints

entrepreneurial finance credit cards and race this paper examines the impact of financial deregulation on entrepreneurship we assess the impact of credit card deregulation on transitions into self employment using state level removal of credit card interest rate ceilings following the us supreme court s 1978 marquette decision as a quasi natural experiment we find that credit card deregulation increases the probability of entrepreneurial entry with a particularly strong effect for black entrepreneurs we demonstrate that these effects are magnified in states with a history of racial discrimination and link the results to discriminationbased barriers to entry 2012 elsevier b v all rights reserved

discrimination in the small business credit market we use data from the 1993 and 1998 national surveys of small business finances to examine the existence of racial discrimination in the small business credit market we conduct an econometric analysis of loan outcomes by race and find that black owned small businesses are about twice as likely to be denied credit even after controlling for differences in creditworthiness and other factors a series of specification checks indicates that this gap is unlikely to be explained by omitted variable bias these results indicate that the racial disparity in credit availability is likely caused by discrimination

subprime borrowers securitization and the transmission of business cycles a growing literature i e jaffee lynch richardson and van nieuwerburgh 2009 acharya and schnabl 2009 argues that securitization improves financial stability if the securitized assets are held by capital market participants rather than financial intermediaries i construct a quantitative macroeconomic model with a novel specification for mortgage backed securities mbs to evaluate this claim my findings suggest that the existence of the securitization market stabilizes the economy under the condition that financial intermediaries do not engage in the acquisition of securitized assets in the presence of large negative housing preference shocks the drop in output in the first year after the shock is halved if subprime mbs are purchased by non financial agents rather than held by banks less

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

racial discrimination in umpire voting an arguably unexpected result abstractusing data from an official most valuable player award in professional sport we test for the presence of discrimination by match officials umpires who are responsible for ranking the top three players within each match these umpires are found to award significantly more votes to and have a higher probability of voting for players identified as australian indigenous after controlling for within match production the result offers further evidence on racial discrimination and runs counter to numerous analogous studies both in sport as well as in labour and other socio economic outcomes in general

tax rates and tax evasion evidence from missing imports in china tax evasion by its very nature is difficult to observe we quantify the effects of tax rates on tax evasion by examining the relationship in china between the tariff schedule and the evasion gap which we define as the difference between hong kong s reported exports to china at the product level and china s reported imports from hong kong our results imply that a one percentage point increase in the tax rate is associated with a 3 percent increase in evasion furthermore the evasion gap is negatively correlated with tax rates on closely related products suggesting that evasion takes place partly through misclassification of imports from higher taxed categories to lower taxed ones in addition to underreporting the value of imports

has the community reinvestment act increased loan availability among small businesses operating in minority neighbourhoods the 1977 community reinvestment act cra established a bold agenda requiring financial institutions in the usa to serve the credit needs of low and moderate income areas including traditionally excluded minority residential areas initially opposed by both bankers and the federal regulatory authorities responsible for enforcement the cra has been contentious for decades this study explores cra impacts by investigating whether small businesses located in minority neighbourhoods have the same degree of bank loan access as equally creditworthy firms located in other environs we analysed both the unmet credit needs of small firms and the outcomes of their loan applications we found that equality in loan access has been attained in some respects indicating the cra has had positive effects on loan availability inequality nonetheless persists regarding unmet credit needs firms are penalised if their owners are african american latino or asian american since roughly half of owners in minority communities are minorities our challenge was to disentangle the effects on loan access of small business geographic location versus owner race causal factors underlying our findings were investigated did bank regulators take the initiative in lessening traditional discriminatory lending practices alternatively were activist community groups responsible while the agenda advocated by activist groups coincides closely with actual gains the overlapping but differing stated objectives of regulators did not

new vehicle characteristics and the cost of the corporate average fuel economy standard by 2016 the corporate average fuel economy cafe standard will increase by 40 this article focuses on the medium run effects of fuel economy regulation we estimate consumers willingness to pay for vehicle characteristics we employ a novel empirical strategy that accounts for the characteristics endogeneity by using variation of engine models used in vehicle models the results imply that consumers value an increase in power more than an increase in fuel economy simulations of the effects of an increase in the cafe standard suggest that regulatory costs are significantly smaller in the medium run than in the short run

an evaluation of lender redlining in the allocation of unsecured consumer credit in the us credit discrimination in the us has been a topic of considerable interest over the past few decades this paper examines the lending behaviour of a commercial depository institution with respect to unsecured consumer loans in minority versus non minority us census tracts in contrast to previous studies the data include information about applicants credit scores and marginal exceptions to loan policy in a logit model of the probability of denial no evidence of discrimination is found for overall loans or when an application is turned down even when a minimum credit score is reached the evidence of non discrimination is not as clear for applications that were approved despite falling short of minimum credit scores or applications that barely met the minimum score but were turned down the results suggest that future research on lending discrimination should focus on these marginal exceptions to loan policy

ethnic matching in the u s venture capital market we document the role of entrepreneurial founder and venture capital vc partner co ethnicity in shaping investment relationships co ethnicity increases the likelihood that a vc firm invests in a company conditional on investment co ethnicity strengthens the degree of involvement by raising the likelihood of vc board of director involvement and increasing the size and scope of investment these results are consistent with trust and social network based mechanisms shared ethnicity in our sample is associated with worse investment outcomes as measured by investment liquidity however which our results suggest might stem from looser screening and or corporate governance

unwilling or unable to cheat evidence from a tax audit experiment in denmark this paper analyzes a tax enforcement field experiment in denmark in the base year a stratified and representative sample of over 40 000 individual income tax filers was selected for the experiment half of the tax filers were randomly selected to be thoroughly audited while the rest were deliberately not audited the following year threat of audit letters were randomly assigned and sent to tax filers in both groups we present three main empirical findings first using baseline audit data we find that the tax evasion rate is close to zero for income subject to third party reporting but substantial for self reported income since most income is subject to third party reporting the overall evasion rate is modest second using quasi experimental variation created by large kinks in the income tax schedule we find that marginal tax rates have a positive impact on tax evasion for self reported income but that this effect is small in comparison to legal avoidance and behavioral responses third using the randomization of enforcement we find that prior audits and threat of audit letters have significant effects on self reported income but no effect on third party reported income all these empirical results can be explained by extending the standard model of rational tax evasion to allow for the key distinction between self reported and third party reported income

consumers as tax auditors to investigate the enforcement value of third party information on potentially collusive taxpayers i study an anti tax evasion program that rewards consumers for ensuring that firms report sales and establishes a verification system to aid whistle blowing consumers in sao paulo brazil nota fiscal paulista firms reported sales increased by at least 21 percent over 4 years the results are consistent with fixed costs of concealing collusion increased detection probability from whistle blower threats and with behavioral biases associated with lotteries amplifying the enforcement value of the program although firms increased reported expenses tax revenue net of rewards increased by 9 3 percent

the taxation of domestic and foreign banking abstract using bank level data for 80 countries in the 1988 1995 period this paper examines taxation of domestic and foreign owned banks the profitability of foreign banks is found to rise relatively little with their domestic tax burden perhaps reflecting the availability of foreign tax credits and profit shifting opportunities the paper also examines whether domestic and foreign banks pay different amounts of domestic tax taxes paid by foreign banks are shown to rise relatively little with the local statutory tax this evidence supports the hypothesis that foreign banks engage in relatively extensive profit shifting

the impact of entrepreneurship programs on minorities we document the impact of an entrepreneurship training program on startup activity of minorities females and non caucasians we compare entrepreneurial activity between applicants who are accepted into the program with applicants who are program finalists but not accepted we find that the effect of the program is small for minorities in the short run however the effect of the program is more pronounced for minorities likelihood of longer run startup activity whereas the effect on non minorities is small and statistically insignificant we suggest that such programs are most effective for individuals that may otherwise have limited access to entrepreneurial opportunities

gender discrimination in microfinance some evidence from uganda abstractmicrofinance literature has proved the existence of gender discriminatory practices against women in some specific contexts discrimination is often explored from the access side loans approved or denied following agier and szafarz 2013 we deviate from this practice and use the variable loan size considering up to four loans for each client drawing on data from a microfinance programme in uganda we find no evidence of gender discrimination against women clients even though our results show that the loan size is influenced by personal characteristics and that women in contrast to men are rewarded according to their credit history

do lenders discriminate against minority and woman entrepreneurs abstract this paper draws on a conceptual analysis of discrimination to improve the methodology for estimating discrimination in small business credit markets and to provide some evidence about the possible causes of discrimination in these markets using a variety of statistical enhancements to existing studies we find statistically significant evidence of substantial discrimination in loan approval against black owned and hispanic owned businesses in 1998 we also find some hints that this discrimination takes the form of statistical discrimination driven by lenders stereotypes about the ability of black and hispanic owned businesses to succeed under some circumstances although we find no discrimination on average in interest rates on approved loans we also find that black owned businesses do face discrimination in interest rates when they borrow from finance companies and businesses such as mutual fund companies and leasing companies with a primary mission other than lending these findings suggest that federal financial regulatory agencies should re double their efforts to uncover and prosecute lenders who discriminate against black and hispanic owned businesses and that new tools may be needed to find discrimination by firms not well covered by the existing fair lending enforcement system

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

mortgage lending to minorities where s the bias this paper examines mortgage lending and concludes that studies based on data created by the boston fed should be reevaluated a detailed examination of these data indicates that irregularities in these data when combined with the most commonly used research methodology appear to have biased previous research toward a finding of discrimination against minority applicants when the most severe data irregularities are eliminated evidence to support a hypothesis of discrimination disappears the currently fashionable flexible underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the beneficiaries of these policies

economies of scale and the demand for money cross sectional data from four surveys of small business finance demonstrate that economies of scale in money holding exist that these economies appear to be increasing over time and that the magnitudes are greater than those estimated for large us corporations firms not practising several specific cash management techniques and firms facing constraints in the credit market hold lower money balances minority owned firms exhibit economies of scale similar to the overall sample but cash management practices and credit constraint variables generally do not influence their money holding behavior scale economies vary widely across industries but overall means are relatively stable over time

fiscal policy with heterogeneous agents and incomplete markets i undertake a quantitative investigation into the short run effects of changes in the timing of proportional income taxes for model economies in which heterogeneous households face a borrowing constraint temporary tax changes are found to have large real effects in the benchmark model a temporary tax cut increases aggregate consumption on impact by around 29 cents for every dollar of tax revenue lost comparing the benchmark incomplete markets model to a complete markets economy income tax cuts provide a larger boost to consumption and a smaller investment stimulus when asset markets are incomplete copyright 2005 wiley blackwell

on the determinants of credit rationing firm level evidence from transition countries abstract using survey data for firms from eastern european transition economies we investigate the determinants of credit rationing our rationing definition incorporates firms whose loan application was rejected but also discouraged potential borrowers we employ a bivariate probit with censoring approach that accounts for the underlying selectivity since rationed firms are a subset of those without a loan we include firm specific attributes related to the alleviation of informational asymmetries and therefore expected to affect credit rationing we find that credit rationing depends on firm size profitability sales growth ownership type legal status sectoral heterogeneity and the country specific level of domestic credit

the latent demand for bank debt characterizing discouraged borrowers concerns that small firms encounter credit constraints are well entrenched in the literature despite widespread empirical evidence that a relatively small proportion of small firms have their loan applications rejected however many firms may be discouraged from applying for fear of rejection these businesses are the focus of this paper based on responses to a large scale postal survey of uk small and medium sized enterprises smes we find that twice as many businesses were discouraged from applying for a bank loan than had their loan request denied more particularly we observe a number of distinguishing characteristics of discouraged borrowers relative to applicants these include strategy sector prior entrepreneurial experience and banking relationships the implications of our findings for policy and future research are briefly discussed

the role of demographics in small business loan pricing demographic change influences the structure of the entrepreneurially active population which may affect credit risk and financing conditions of small firms using bank internal data of small business loans in germany we find that the lending relationship plays a larger role for loan prices than demographics loan rates decrease with soft information gained through longer loan processing time and a larger number of accounts at the same bank they increase with hard information about repayment arrears and reminders late payments have the largest influence on loan prices older entrepreneurs do not seem to be discriminated rather the younger have to pay more because their loans and businesses are smaller and they lack liquidity to pay in time marital status and population density of the business district do not matter this is good news for aging economies with a rising share of elderly and singles and growing disparities between peripheral and agglomerated regions

the impact of institutional sources of capital upon the minority oriented venture capital industry venture capital vc funds specializing in investing equity capital in minority owned businesses have grown rapidly over the past decade fueled by the willingness of major institutional investors to support this traditionally neglected niche we investigate impacts of public pension funds upon the minority vc sector these funds providing over half of all capital invested in minority vcs selectively invest seeking to fund only those vcs likely to generate high returns although they attempt to pick the winners our findings indicate that they have failed to do so the influence of public pension funds upon the minority vcs is nonetheless real skewing investing away from traditional practices and toward those of the venture capital mainstream in the process minority vcs funded by pension fund money invest in high tech fields more than other minority oriented vc funds do further they are less likely to fund minority owned small firms focusing increasingly upon firms owned by nonminority whites neither of these trends has resulted in increased returns rather diverting minority oriented vcs away from their traditional mission of investing in minority firms operating in a broad range of industries has resulted in lower returns over the years studied

caste and credit a woeful tale this paper examines caste based differences in farmers access to bank loans in rural india we investigate whether banks practice taste based discrimination on the basis of caste in order to identify potential discrimination we consider loan applications and approval decisions separately we find significant inter caste differences in application rates and evidence of discrimination against scheduled tribe borrowers at the approval stage to rule out the role of statistical discrimination we simulate unobserved credit histories with various distributions evidence for taste based discrimination persists despite accounting for unobservables however we find that this discrimination does not affect small farmers

venture capital investment in minority business this study analyzes the performance of mature investments made by venture capital vc funds that specialize in financing minority business enterprises we explore the hypothesis that vcs focusing on investing in minority businesses earn attractive returns because this market niche is underserved minority vc funds collectively earned yields on their realized investments that were estimated to be broadly equivalent to those of the mainstream vc industry however these yields vary greatly from fund to fund vc fund traits that predict high yields on individual investments are identified by estimating multivariate regressions explaining net investment returns copyright c 2008 the ohio state university

are minority owned businesses underserved by financial markets evidence from the private equity industry our study addresses a longstanding question whether discrimination exists in financial markets although empirical evidence demonstrating disparate treatment of minorities is vast studies have inadequately explained why minority customers seeking financing are targeted for discriminatory treatment we develop a theoretical framework explaining why profit maximizing capital suppliers may choose to offer minority clients worse terms than those provided to comparable white customers our framework stresses search costs and reservation prices we then test this by comparing the relative profitability of investing private equity in minority and white owned small firms an approach advocated by gary becker using three empirical tests we consistently find the financial returns derived from investing in minority firms exceed those of white firm investments conducting becker s test in this instance indicates that disparate treatment of minority clients does not result in loss of profitable investing opportunities for private equity funds but instead higher profits

connectedness and sme financing in post communist economies evidence from uzbekistan this paper investigates effects of interpersonal links with bureaucrats on sme access to formal finance a survey of 502 smes in post communist uzbekistan shows fewer smes with government connections express a need for external finance but success rates of applications are higher than for smes without connections econometric models show government connected smes receive more formal credit than their counterparts the small share of sme credit available is thus distributed in favour of those capitalising on bureaucratic links with consequent resource misallocation findings imply that greater sme credit flows need supplementing with capacity building that improves bank transparency and efficiency

mortgage lending in boston a reconsideration of the evidence i introduction discrimination in the marketplace is often measured using statistical methods in order for the results to be interpretable as some form of discrimination it is necessary that these methods be firmly based on economic theories as to how these markets function the reason for this is that it is easy to confuse voluntary acts of segregation from involuntary acts of discrimination by the simple examination of statistical entrails the former is presumably acceptable to society whereas the latter is not any society that values its freedoms will want to ensure that a mis classification of the former as evidence of the latter is avoided claims of racial discrimination in mortgage lending provide an excellent arena to illustrate the issues that arise in statistically measuring discrimination in the united states data on mortgage applications has been collected for several years under the home mortgage disclosure act hmda these data show a persistent tendency for blacks to be denied mortgages at a greater rate than whites leading many political commentators to claim that they prove the existence and severity of racial discrimination one problem with the statistical measurement of discrimination is that the available data are often inadequate the hmda data has been criticized for not collecting all of the information germane to the loan decision such as the credit history or personal characteristics of the loan applicant and co applicant the argument is that blacks are denied loans more than whites because of these characteristics rather than the color of their skin whether or not this in turn reflects prior or concurrent racial discrimination in other markets e g in employment or housing or education is an intriguing question with important implications for policy reform in mortgage lending regulations 1 in an effort to address these concerns the federal reserve bank of boston undertook to augment the basic hmda data in the boston area with ancillary data on loan applicants see munnell et al 1992 1996 the vast bulk of these extra data were collected from the original loan application file at the bank of original application indicating that the information was viewed by the bank as relevant to the loan decision the boston fed study found that allowing for the characteristics of black applicants reduced the statistical importance of the applicant s race but that some racial discrimination remained specifically they find that black and hispanic applicants are roughly 60 more likely to be turned down just because of their ethnic origin the denial rate in this sample is about 17 for such applicants rather than the 11 denial rate for statistically equivalent whites although the study has been the subject of some controversy in the popular press 2 and policy circles 3 it remains an important effort to address these issues by directly collecting the primary data there are however some problems with the way in which these data are interpreted by munnell et al 1992 1996 these problem concern their statistical methods even if one accepts the economic model of mortgage lending decisions underlying their study simple corrections to their statistical procedures removes any evidence of discrimination an important conclusion echoing the boston fed study itself is to point out the dangers of drawing inferences about discrimination based on incomplete data moreover the simple statistical corrections considered here are the standard fare of textbooks and not from the fancy frontiers of econometrics hence it is likely to be useful in general to see why those textbook lessons are there by having them demonstrated explicitly in an important policy setting ii replicating the boston fed results the boston fed study began with the existing hmda database for mortgage applications in the boston area for 1990 4 the fed requested that banks augment their hmda reports for all applications made by blacks and hispanics and by a random sample of applications made by whites

cultural proximity and loan outcomes we present evidence that shared codes religious beliefs ethnicity cultural proximity between lenders and borrowers improves the efficiency of credit allocation we identify in group preferential treatment using dyadic data on the religion and caste of bank officers and borrowers from a bank in india and a rotation policy that induces exogenous matching between officers and borrowers cultural proximity increases lending on both intensive and extensive margins and improves repayment performance even after the in group officer is replaced by an out group one further cultural proximity increases loan dispersion and reduces loan to collateral ratios our results imply that cultural proximity mitigates informational problems that adversely affect lending which in turn relaxes financial constraints and improves access to finance

access to credit by small businesses how relevant are race ethnicity and gender this paper employs data from the 1998 and 2003 survey of small business finances to analyze whether after controlling for observable factors that influence loan decisions there is a significant difference in the loan approval rate and the interest rate charged on approved loans for businesses owned by minority or white females and firms owned by white males

minority entrepreneurship in twenty first century america prior to the 1970s minority owned small businesses were small in size and scope and common in only a few industry niches business owners were severely capital constrained lacking in higher education and training in skilled occupations the median owner today in contrast is college educated access to financing has expanded and opportunities to serve corporate and public sector clients are commonplace nearly 40 of all new firms created nationwide in 2015 were minority owned changing attitudes in mainstream society reduced traditional barriers true equality of opportunity among small minority and white owned firms of similar size and scope has nonetheless not been achieved this issue of small business economics examines lingering barriers impeding the development of a more vibrant minority business community focusing on access to financing and government procurement markets articles in this issue offer explicit analyses of enduring barriers along with explanations of adoptive strategic firm behavior appropriate for reducing those barriers

gender gap in peer to peer lending evidence from china abstract this paper documents and analyzes the gender gap in the online credit market using data from renrendai a leading peer to peer lending platform in china we show that lending to female borrowers is associated with better loan performance including a lower probability of default a higher expected profit and a lower expected loss than for their male peers however despite the higher creditworthiness we don t find any measurable gender impact on funding success rate meaning that female borrowers have to compensate lenders by providing higher profitability to achieve a similar funding probability these evidences indicate the existence of a gender gap that discriminate against female borrowers further analysis implies that this gender gap is independent of the amount of information disclosed by borrowers

opacity of young businesses evidence from rating disagreements abstract a conventional wisdom in the contemporary corporate finance literature argues that small and medium sized enterprises smes are informationally opaque we use data from two credit information companies and in particular their disagreements over the creditworthiness of smes to study the empirical relevance of this often invoked assumption our panel data analysis shows that once unobserved firm effects are controlled for the disagreements i e rating splits are inversely related to the age of firms we are not able to document such a robust relationship between the disagreements and the size of firms this finding holds a lesson for empirical corporate finance researchers who need firm level proxies for informational imperfections and asymmetries of the two often used proxies firm size is not as closely related to informational opacity as firm age is

subjectivity in credit allocation to micro entrepreneurs evidence from brazil this paper estimates the impact of loan officer subjectivity on microcredit granting by exploiting an exceptionally detailed database from a brazilian microfinance institution the loan officers collect field data meet with applicants and make recommendations to the credit committee which has the final say on both loan approval and loan size ls the loan officer s subjectivity is captured through gender bias our estimations indeed show subjective gender gap in ls this gap is almost exclusively attributable to loan officers we interpret this finding as evidence that despite monitoring and wage incentivization microcredit officers let their subjective preferences interfere with loan granting we conclude by suggesting alternative means to curb subjectivity in credit allocation to micro entrepreneurs

the financial power of the powerless socio economic status and interest rates under partial rule of law in advanced economies interest rates vary inversely with the borrower s socio economic status which itself depends inversely on default risk these relationships depend on the impartiality of the law where the law is markedly biased in favour of certain groups the latter will pay a surcharge for capital legal power as measured by privileges before the law thus undermines financial power the capacity to borrow cheaply developing this argument this paper also tests it through judicial records from ottoman istanbul 1602 1799 three privileged ottoman groups men muslims and titled elites all paid relatively high interest rates conditional on various loan characteristics this article is protected by copyright all rights reserved

gender bias and credit access we extract an exogenous measure of gender bias from survey responses by descendants of u s immigrants on questions about the role of women in society we then use data on around 6 000 small business firms from 17 countries and find that in high gender bias countries female entrepreneurs are more likely to opt out of the loan application process and to resort to informal finance even though banks do not appear to actively discriminate against them these results are not driven by credit risk differences between female and male owned firms or by any idiosyncrasies in the set of countries in our sample

sex and credit do gender interactions matter for credit market outcomes abstract this paper studies the effects of gender interactions on the supply of and demand for credit using data from a large albanian lender we document that first time borrowers assigned to officers of the opposite sex are less likely to return for a second loan the effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs as proxied by financial market competition and branch size we also find that first time borrowers matched with opposite sex officers pay higher interest rates and receive smaller and shorter maturity loans but do not experience higher arrears our results are consistent with the existence of a gender bias and learning effects that lead to the disappearance of the bias

the price variability volume relationship on speculative markets this paper concerns the relationship between the variability of the daily price change and the daily volume of trading on the speculative markets our work extends the theory of speculative markets in two ways first we derive from economic theory the joint probability distribution of the price change and the trading volume over any interval of time within the trading day and second we determine how this joint distribution changes as more traders enter or exit from the market the model s parameters are estimated by fiml using daily data from the 90 day t bills futures market the results of the estimation can reconcile a conflict between the price variability volume relationship for this market and the relationship obtained by previous investigators for other speculative markets this paper concerns the relationship between the variability of the daily price change and the volume of trading on speculative markets previous empirical studies 2 3 6 12 14 16 of both futures and equity markets always find a positive association between price variability as measured by the squared price change ap2 and the trading volume 2 there are two explanations for the relationship clark s 2 explanation which is secondary to his effort to explain why the probability distribution of the daily price change is leptokurtic emphasizes randomness in the number of within day transactions in clark s model the daily price change is the sum of a random number of within day price changes the variance of the daily price change is thus a random variable with a mean proportional to the mean number of daily transactions clark argues that the trading volume is related positively to the number of within day transactions and so the trading volume is related positively to the variability of the price change the second explanation is due to epps and epps 6 their model examines the mechanics of within day trading the change in the market price on each within day transaction or market clearing is the average of the changes in all of the traders reservation prices epps and epps assume there is a positive relationship between the extent to which traders disagree when they revise their reservation prices and the absolute value of the change in the market price that is an increase in the extent to which traders disagree is associated with a larger absolute price change the price variability volume relationship arises then because the volume of trading is positively related to the extent to which traders disagree when they revise their reservation prices

experience tenure and the perceptions of employers this paper examines how group based assessments concerning employee ability impact employee compensation the employer learns about worker ability through bayesian updating creating an additional channel for wage growth that is not available to those workers with only general labor market experience consistent with the model s predictions results from national longitudinal survey of youth nlsy indicate that black workers fare much better relative to white workers in returns to tenure than in returns to experience finally parameter estimates in the structural model suggest that employers initially undervalue black males but that their wages rise with learning by employers over time on average black males earn lower wages than white males just as average wages differ across many groups this paper examines one explanation for this wage gap the possibility that employers underestimate the ability of workers in one or more groups in particular this paper proposes a model that provides explicit predictions about the affect of employer s perceptions on workers returns to general experience and tenure on the job we then examine the wage growth of young males to see whether patterns are consistent with the model economic theory provides many other explanations for differences in wages across groups

how costly is affirmative action government contracting and california s proposition 209 abstract this paper investigates the effect of disadvantaged business enterprise subcontractor goals on the winning bids for highway construction contracts using california s proposition 209 which prohibited the consideration of race or gender in awarding state funded contracts after proposition 209 prices on state funded contracts fell by 5 6 relative to federally funded projects for which preferences still applied most of the price decline after proposition 209 resulted from the mix of subcontractors employed which seems to arise from the higher costs of firms located in high minority areas finally short run barriers to entry and expansion may increase the cost of affirmative action

competition small business financing and discrimination evidence from a new survey we analyze credit applications loan denials and interest rates paid by small businesses across owner gender race and ethnicity in addition we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down after controlling for a rich set of explanatory variables including personal and business credit histories substantial differences in denial rates between firms owned by african americans and white males remain moreover consistent with becker s classic theories 1957 we find evidence that increases in competition in the firm s local banking market reduces these differences

car notches strategic automaker responses to fuel economy policy notches where small changes in behavior lead to large changes in a tax or subsidy gure prominently in many policies but have been rarely examined by economists in this paper we analyze a class of notches associated with policies aimed at improving vehicle fuel economy we provide several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment we then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts