Asymmetrical Access to Capital : Why Ethics Matters
8th edition (2020/2021)
Accountability / Exclusion
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If an ethical financial system is one in which no one is left out, then an unethical financial system is one in which certain groups are chronically disconnected from basic financial services.
In the United States, individuals who identify as Black, Indigenous, or People of Color (BIPOC) and households characterised as low-wealth are often shut out from mainstream financial resources.
This paper argues that asymmetrical access to capital is caused in part by a persistent gap between US financial regulations and a higher ethical standard. The paper calls for mainstream financial institutions to go beyond the baseline of legal compliance and adopt a more rigorous ethical standard to extend access to capital to historically underserved communities. Recognising that financial institutions and underserved communities have survived in separate financial realities for generations, the paper illuminates lessons learned from a network of community development financial institutions (CDFIs) which have demonstrated a successful track record driving affordable capital to BIPOC and low-wealth communities across the US. Finally, the paper recommends accountability measures to reinforce a long-term commitment to restoring ethical decision-making as it relates to financial inclusion.