Does Differential Treatment Translate to Differential Outcomes for Minority Borrowers? Evidence from Matching a Field Experiment to Loan-Level Data

Andrew Hanson, Zackary Hawley and Hal Martin

No 1703, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: This paper provides evidence on the relationship between differential treatment of minority borrowers and their mortgage market outcomes. Using data from a field experiment that identifies differential treatment matched to real borrower transactions in the Home Mortgage Disclosure Act (HMDA) data, we estimate difference-in-difference models between African American and white borrowers across lending institutions that display varying degrees of differential treatment. Our results show that African Americans are more likely to be in a high-cost (subprime) loan when borrowing from lenders that are more responsive to them in the field experiment. We also show that net measures of differential treatment are not related to the probability of African American borrowers having a high-cost loan. Our results suggest that differential outcomes are related to within-institution factors, not just across-institution factors like institutional access, as previous studies find.

Keywords: discrimination; mortgage lending; loan outcomes (search for similar items in EconPapers)
JEL-codes: G2 J15 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2017-03-22
New Economics Papers: this item is included in nep-ban, nep-exp and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:1703

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DOI: 10.26509/frbc-wp-201703

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