An Overlooked Factor in Banks’ Lending to Minorities

Matteo Crosignani and Hanh Le

No 20240110, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In the second quarter of 2022, the homeownership rate for white households was 75 percent, compared to 45 percent for Black households and 48 percent for Hispanic households. One reason for these differences, virtually unchanged in the last few decades, is uneven access to credit. Studies have documented that minorities are more likely to be denied credit, pay higher rates, be charged higher fees, and face longer turnaround times compared to similar non-minority borrowers. In this post, which is based on a related Staff Report, we show that banks vary substantially in their lending to minorities, and we document an overlooked factor in this difference—the inequality aversion of banks’ stakeholders.

Keywords: inflation; inflation expectations; markups; market power; euro area; supply chain; inequality (search for similar items in EconPapers)
JEL-codes: D63 G21 (search for similar items in EconPapers)
Date: 2024-01-10
New Economics Papers: this item is included in nep-ban and nep-ure
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