Review of Financial Studies Vol. 38 No. 11 2025
Finance, Advertising, and Race
Abstract
We study how bank advertising practices contribute to racial disparities in financial markets by steering minorities toward inferior products. We exploit a regulatory change that incentivizes deposit collection at the Freedman’s Savings Bank, the first institution to collect deposits from African Americans post-Emancipation, by facilitating misuse of depositor funds. After deregulation, advertising volume rises, particularly in African American newspapers, leading to increased deposits from Black depositors despite the bank’s insolvency. We identify persuasion as a key mechanism; prescriptive stereotypes and false claims likely amplify advertising’s impact on African Americans, exacerbating historically large depositor losses after the bank’s collapse.
- DOI
- 10.1093/rfs/hhaf038
- Volume
- 38
- Issue
- 11
- Pages
- 3149-3204
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref