Measuring Bias in Consumer Lending

Will Dobbie, Andres Liberman, Daniel Paravisini and Vikram Pathania
Additional contact information
Daniel Paravisini: London School of Economics
Vikram Pathania: University of Sussex

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: This paper tests for bias in consumer lending using administrative data from a high-cost lender in the United Kingdom. We motivate our analysis using a new principal-agent model of bias, which predicts that profits should be higher for the most illiquid loan applicants at the margin if loan examiners are biased. We identify the profitability of marginal applicants using the quasi-random assignment of loan examiners. Consistent with our model, we find significant bias against immigrant and older applicants when using the firm’s preferred measure of long-run profits, but not when using the short-run measure used to evaluate examiner performance.

JEL-codes: G41 J15 J16 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-ban and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://research.hks.harvard.edu/publications/getFile.aspx?Id=3833

Related works:
Journal Article: Measuring Bias in Consumer Lending (2021)
Working Paper: Measuring bias in consumer lending (2021)
Working Paper: Measuring Bias in Consumer Lending (2018)
Working Paper: Measuring Bias in Consumer Lending (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp19-029

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