Are our banks racist?
Non-white households are more likely to be excluded from access to credit, even if they have comparable credentials to white households, according to a leading banking expert.
Research by Professor Phil Molyneux at Bangor University and colleagues from Hull Business School also found that Asian bank customers are more likely to have difficulty in getting bank loans, compared to their white peers.
The academics based their research on the Living Costs and Food Survey gathered by the Office for National Statistics and found that "inherent racism within bank credit systems reduces access to credit for ethnic minorities".
Professor Molyneux suggests such racism is rife and has existed through the 'boom' years as well as during the financial crises.
"Surprisingly, we noticed a rise in discrimination during the boom period between 2004 and 2007, a time when banks are reported to have relaxed their lending standards. It may be that relaxation of credit standards only applied to white households; this is likely to have further increased the gap of credit accessibility for non-white households," he said.
"The reasons for the racial discrimination are unclear. It may be due to long-established prejudices of bankers enshrined in credit-granting decision-making, and possibly built in to credit scoring models. That is why these processes need to be re-appraised and made transparent so that they can be challenged."
A government inquiry into racism in British banks' lending practices has been delayed but is said by Deputy Prime Minister Nick Clegg's office to be due out later this summer or during the autumn.
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