Does mandatory disclosure affect subprime lending to minority neighborhoods?

Zsuzsa Huszár (), George Lentz () and Wei Yu ()

Journal of Economics and Finance, 2012, vol. 36, issue 4, 900-924

Abstract: We examine changes in lending behavior in response to the Federal Reserve’s requirement for disclosure of loan pricing information implemented in 2004 for two broad types of lenders, depository and nondepository institutions. We find that although subprime approval rates generally increased after 2004 as the housing market boomed, there was nonetheless a reduction in subprime approval rates to minority neighborhoods following implementation of the pricing disclosure requirement. We also find that the effect of the pricing disclosure requirement on subprime approval rates was stronger for depository institutions than for nondepository institutions. Moreover, depository institutions with good reviews from regulators for effectively serving the financing needs of local communities are less likely to issue higher-priced subprime loans. Copyright Springer Science+Business Media, LLC 2012

Keywords: Depository Institutions; Nondepository Institutions; Information Disclosure; Subprime Mortgage Lending; G01; G21; G14 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12197-010-9163-6

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