Fair Lending Monitoring Models

Maia Berkane ()
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Maia Berkane: Wells Fargo & Co.

A chapter in Commercial Banking Risk Management, 2017, pp 135-150 from Palgrave Macmillan

Abstract: Abstract This chapter presents an overview and some major insights into modeling approaches of a very important regulatory risk for institutions that engage in credit activities: fair lending risk. Regulatory agencies have defined protected classes or prohibited basis under the Equal Credit Opportunity Act (ECOA) and Fair Housing Act (FHA). Failure to comply with fair lending rules can expose the institution to reputation risk, legal risk, enforcement action, and fines from different regulatory agencies. We present some of the quantitative challenges in detecting and measuring this kind of risk and give a different modeling approach that addresses some of these challenges.

Keywords: Propensity Score; Base Class; Average Treatment Effect; Loan Officer; Hide Bias (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-59442-6_7

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DOI: 10.1057/978-1-137-59442-6_7

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