COVID Racial Disparities in Financial Complaints and the Role of Corporate Social Attitudes

Authors: Rachel M. Hayes, Feng Jiang, Yihui Pan, Huayi Tang

Abstract: Using consumer complaints filed with the Consumer Financial Protection Bureau as a measure for the quality of financial products and services, we document significant and robust differential impacts of COVID-19 on high vs. low minority communities. Relative to the pre-COVID period, the racial gap in financial complaints increased by more than 60% during the pandemic. In contrast, we do not find a robust COVID spike related to other heterogeneities in community characteristics. Using a triple-difference approach, we establish the role of corporate social attitudes, reflected in, for example, inclusive promotion practices and diversity in leadership, in mitigating the increase in the racial gap in consumer complaints during COVID. Our results shed light on how inclusive corporate culture filters through an organization to benefit minority communities during a crisis, and underscore the effect of corporate social attitudes on important stakeholder outcomes.