Mortgage Lenders' Market Response to a Landmark Regulatory Decision Based on Fair Lending Compliance
AbstractRegulation of real estate lending has substantially increased in the past decade. Government efforts to improve compliance with Community Reinvestment Act mandates are evidence of increased emphasis on racial equal opportunity in loan origination. To investigate the impact of these efforts, this paper examines the Federal Reserve Bank rejection of Shawmut National Corporation's application to buy New Dartmouth Bank. Rejection was based on Shawmut's poor compliance with fair-lending guidelines. Testing finds significant negative abnormal stock returns for samples of mortgage lenders on the announcement day of Shawmut's application rejection. In addition, cross-sectional analysis reveals an inverse relationship between national banks' cumulative abnormal returns (CARs) and a measure of fair lending.
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Bibliographic InfoArticle provided by American Real Estate Society in its journal Journal of Real Estate Research.
Volume (Year): 11 (1996)
Issue (Month): 1 ()
Contact details of provider:
Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Find related papers by JEL classification:
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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