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Self-selection and discrimination in credit markets

Stanley D. Longhofer and Stephen R. Peters

No 9809, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: This paper increases understanding of the causes and consequences of discrimination in credit markets. It develops an underwriting model in which lenders use a simple Bayesian updating process to evaluate applicant creditworthiness. It also models individuals' self-selection behavior to show how market frictions can affect application decisions.

Keywords: Mortgages; Discrimination in consumer credit (search for similar items in EconPapers)
Date: 1998, Revised 1998
New Economics Papers: this item is included in nep-cfn, nep-fmk, nep-ifn and nep-mic
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Handle: RePEc:fip:fedcwp:9809