What is the negative effect of stereotypes ? 

From my limited experience, I would have to say the biggest negative effect of stereotyping in the closing of the mind. They say that minds are like parachutes; they both work best when open.

Stereotyping provides a view which may be based on some truths/facts, but is often limited and biased. They tend to be a neat and convenient capsule summary slanted toward a view point of the creator. Other non-critical thinkers can be seduced by stereotypes which simplifies the world. The small element(s) of truth contained in the stereotype seem so obvious and create a hint of credibility. Non-critical thinkers accept the stereotype and may intentionally or unintentional perpetuate and spread it.

In the heat of the moment, stereotypes lend themselves to mob rule when emotions run high and reason seems to be on holiday. In some cases the emotions give way to fear, and fear is a very poor substance for leadership. The internment of Americans of Japanese descent in WWII is a case in point.

Stereotyping applied to the HIV crisis served to mask the true nature of the disease....labeling it as a "gays" only plague. Yet today, in many countries, the fastest rising number of HIV infections if among heterosexuals.

Being blinded by stereotypes limits critical thinking and analysis so critical to dealing with the rapid rate of change in modern society.

Hope this helps. Best wishes.