The Color of Money and the People Who Lend It

Sunwoong Kim and Gregory Squires

Journal of Housing Research, 1998, vol. 9, issue 2, 271-284

Abstract: Racial disparities persist in the mortgage lending market, as does debate over their causes. This article examines whether the racial composition of a lender's workforce affects the loan approval rate for minority applicants. The relationship between employment of, and mortgage lending to, blacks, Hispanics, and Asians, is examined in five metropolitan areas: Atlanta, Boston, Denver, Milwaukee, and San Francisco.Linear multiple regression for institutional-level analysis and probit analysis for applicant-level analysis indicate that the racial composition of the workforce does affect loan approval rates for minority applicants. For blacks and Hispanics, employment, particularly in administrative and professional positions, positively affects loan approval; the findings for Asians were mixed. Further research is suggested for developing a fuller understanding of the relationship between employment and loan application approval. Specific policy recommendations are proposed for regulatory agencies, lenders, and community organizations.

Date: 1998
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DOI: 10.1080/10835547.1998.12091937

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