Disaster Lending: "Fair" Prices but "Unfair" Access

We find the Small Business Administration's disaster -relief home loan program denies significantly more loans in areas with larger shares of minorities, subprime borrowers, and higher income inequality. We find that risk -insensitive loan pricing, a feature present in many regulated and government -run lending programs, is an important driver of these disparities in access to credit. The differences in denial rates are disproportionately high compared with private -market lending and government -insured risk -sensitive loan pricing programs. Thus, despite ensuring "fair" prices, the use of risk -insensitive pricing lead to "unfair" access to credit.