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

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. Textual analysis of the complaint narratives reveals that the COVID spike in the racial gap is partly driven by worsening consumer experiences and communication in minority communities—more disputes but less attention from financial institutions during the pandemic. Finally, using triple-differences, we establish the role of inclusive corporate culture, 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 help minority communities during a crisis, and underscore the effect of corporate social attitudes on important stakeholder outcomes.