Social Externalities of Bank Enforcement Actions: The Case of Minority Lending

Byeongchan An (), Robert M. Bushman, Anya V. Kleymenova and Rimmy Tomy
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Byeongchan An: https://eccles.utah.edu/team/an-byeongchang/
Anya V. Kleymenova: https://www.federalreserve.gov/econres/anya-v-kleymenova.htm

No 2022-036, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper studies the role banking supervision plays in improving access to credit for minorities by investigating how enforcement decisions and orders (EDOs) affect the bank borrower base. We find that, after an EDO's termination, banks significantly increase residential mortgage lending to minorities, even when the enforcement order is not issued for violations of fair lending laws. Our findings suggest that improvements in banks' internal credit assessment and compliance due to the enforcement process are associated with the expansion in lending to minority borrowers. Our findings highlight the indirect social benefits of bank enforcement and supervision.

Keywords: Banking; Competition; Disclosure; Discrimination; Enforcement actions; Mortgage lending (search for similar items in EconPapers)
JEL-codes: G21 G28 G38 (search for similar items in EconPapers)
Pages: 53 p.
Date: 2022-06-02
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-isf and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2022-36

DOI: 10.17016/FEDS.2022.036

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