Edmund Cogswell Converse Professor of Finance and Banking

David Scharfstein is the Edmund Cogswell Converse Professor of Finance and Banking at Harvard Business School. Scharfstein has published on a broad range of topics in finance, including corporate investment and financing behavior, risk management, financial distress, capital allocation, and venture capital.  His current research focuses on financial intermediation and financial regulation, including research on housing finance, financial system risk, bank lending and funding, and the growth of the financial sector.  Scharfstein is currently a research associate of the National Bureau of Economic Research. He is also a director of the M&T Bank Corporation. During 2017, he was president of the American Finance Association.  In 2009-2010, he was a senior advisor to the U.S. Treasury Secretary. He previously was a member of the Financial Advisory Roundtable of the Federal Reserve Bank of New York.  From 1987- 2003 he was a finance professor at the MIT Sloan School of Management. Scharfstein received a Ph.D. in Economics from MIT in 1986 and an A.B. from Princeton University in 1982.


Recent Working Paper

Sergey Chernenko and David Scharfstein, 2021. Racial Disparities in the Paycheck Protection Program


We document significant racial disparities in the utilization of the Paycheck Protection Program (PPP). In a large sample of Florida restaurants, Black- and Hispanic-owned restaurants are 20.5% and 7.0% less likely to receive PPP loans than white-owned restaurants within the same ZIP code. Although a part of these disparities stems from differences in firm size and age, Black- and Hispanic-owned restaurants are still 14.5% and 4.9% less likely to receive PPP loans after controlling for these characteristics. Lower PPP utilization is driven by differences in bank lending: relative to white-owned restaurants, Black- and Hispanic-owned restaurants are 19.9% and 4.8% less likely to receive PPP loans from banks, while Black-owned restaurants are 5.5% more likely to receive PPP loans from nonbank lenders and Hispanic-owned restaurants are equally likely to receive nonbank PPP loans. Minority-owned restaurants are also more likely to use the Economic Injury Disaster Loan program, in which firms applied directly to the Small Business Administration for subsidized loans that had less attractive terms than PPP loans. While white-owned firms with prior lending relationships are more likely to receive PPP loans, this is not the case for Black-owned firms. Further, we show that Black-owned restaurants are significantly less likely to receive bank PPP loans in counties in which white people exhibit greater implicit and explicit racial bias towards Black people. Finally, extending our analysis to all industries, we show that conditional on receiving emergency loans, minority-owned firms are less likely to receive them from banks than are white-owned firms that operate in the same industry and ZIP code.