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Strategic Responses to Bank Regulation: Evidence From HMDA Data

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  • Douglas Evanoff
  • Lewis Segal

Abstract

The intent of fair lending regulation is to encourage loans in low income areas and insure that loan decisions are based on economic criteria instead of noneconomic borrower characteristics. We evaluate situations in which banks may find it in their self interest to respond to regulation in a strategic manner intended to improve public relations and appease regulators rather than to adhere to the true spirit of the regulation. We find some evidence consistent with such behavior.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1023/A:1007931207652
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Bibliographic Info

Article provided by Springer in its journal Journal of Financial Services Research.

Volume (Year): 11 (1997)
Issue (Month): 1 (February)
Pages: 69-93

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Handle: RePEc:kap:jfsres:v:11:y:1997:i:1:p:69-93

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Web page: http://www.springerlink.com/link.asp?id=102934

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Evanoff, Douglas D, 1988. "Branch Banking and Service Accessibility," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 191-202, May.
  2. Hunter, William C & Walker, Mary Beth, 1996. "The Cultural Affinity Hypothesis and Mortgage Lending Decisions," The Journal of Real Estate Finance and Economics, Springer, vol. 13(1), pages 57-70, July.
  3. Munnell, Alicia H. & Geoffrey M. B. Tootell & Lynn E. Browne & James McEneaney, 1996. "Mortgage Lending in Boston: Interpreting HMDA Data," American Economic Review, American Economic Association, vol. 86(1), pages 25-53, March.
  4. Yezer, Anthony M J & Phillips, Robert F & Trost, Robert P, 1994. "Bias in Estimates of Discrimination and Default in Mortgage Lending: The Effects of Simultaneity and Self-Selection," The Journal of Real Estate Finance and Economics, Springer, vol. 9(3), pages 197-215, November.
  5. repec:fth:prinin:354 is not listed on IDEAS
  6. Judith A. Chevalier & Glenn D. Ellison, 1995. "Risk Taking by Mutual Funds as a Response to Incentives," NBER Working Papers 5234, National Bureau of Economic Research, Inc.
  7. Richard Startz, . "Implicit Interest on Demand Deposits," Rodney L. White Center for Financial Research Working Papers 04-79, Wharton School Rodney L. White Center for Financial Research.
  8. Griffith L. Garwood & Dolores S. Smith, 1993. "The Community Reinvestment Act: evolution and current issues," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Apr, pages 251-267.
  9. Brewer, Elijah, III & Mondschean, Thomas H, 1994. "An Empirical Test of the Incentive Effects of Deposit Insurance: The Case of Junk Bonds at Savings and Loan Associations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(1), pages 146-64, February.
  10. Josef Lakonishok & Andrei Shleifer & Richard Thaler & Robert Vishny, 1991. "Window Dressing by Pension Fund Managers," NBER Working Papers 3617, National Bureau of Economic Research, Inc.
  11. Kane, Edward J, 1977. "Good Intentions and Unintended Evil: The Case against Selective Credit Allocation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 55-69, February.
  12. Glenn B. Canner & Wayne Passmore, 1995. "Home purchase lending in low-income neighborhoods and to low-income borrowers," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 71-103.
  13. Douglas Evanoff & Lewis Segal, 1997. "Strategic Responses to Bank Regulation: Evidence From HMDA Data," Journal of Financial Services Research, Springer, vol. 11(1), pages 69-93, February.
  14. Glenn B. Canner & Wayne Passmore, 1995. "Credit risk and the provision of mortgages to lower-income and minority homebuyers," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Nov, pages 989-1016.
  15. Healy, Paul M., 1985. "The effect of bonus schemes on accounting decisions," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 85-107, April.
  16. Paul Oyer, 1995. "The Effect of Sales Incentives on Business Seasonality," Working Papers 733, Princeton University, Department of Economics, Industrial Relations Section..
  17. Paul W. Bauer & Brian A. Cromwell, 1994. "A Monte Carlo examination of bias tests in mortgage lending," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 27-40.
  18. Allen, Linda & Saunders, Anthony, 1992. "Bank window dressing: Theory and evidence," Journal of Banking & Finance, Elsevier, vol. 16(3), pages 585-623, June.
  19. Evanoff, Douglas D., 1990. "An empirical examination of bank reserve management behavior," Journal of Banking & Finance, Elsevier, vol. 14(1), pages 131-143, March.
  20. Stickney, Clyde P, 1975. "Window Dressing the Interim-Earnings Report: An Empirical Assessment for Firms Initially Going Public," The Journal of Business, University of Chicago Press, vol. 48(1), pages 87-97, January.
  21. William C. Hunter & Mary Beth Walker, 1995. "The cultural affinity hypothesis and mortgage lending decisions," Working Paper Series, Issues in Financial Regulation 95-8, Federal Reserve Bank of Chicago.
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Citations

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Cited by:
  1. Douglas D. Evanoff & Lewis M. Segal, 1996. "CRA and fair lending regulations: resulting trends in mortgage lending," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 19-46.
  2. Douglas D. Evanoff & Lewis M. Segal, 1996. "Strategic responses to bank regulation: evidence from HMDA data," Working Paper Series, Issues in Financial Regulation WP-96-7, Federal Reserve Bank of Chicago.
  3. George Assaf, A. & Matousek, Roman & Tsionas, Efthymios G., 2013. "Turkish bank efficiency: Bayesian estimation with undesirable outputs," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 506-517.
  4. Raphael Bostic & Brian J. Surette, 2000. "Have the doors opened wider? trends in homeownership rates by race and income," Finance and Economics Discussion Series 2000-31, Board of Governors of the Federal Reserve System (U.S.).
  5. Richard Anderson & James VanderHoff, 1999. "Mortgage Default Rates and Borrower Race," Journal of Real Estate Research, American Real Estate Society, vol. 18(2), pages 279-290.
  6. Glenn B. Canner & Elizabeth Laderman & Andreas Lehnert & Wayne Passmore, 2002. "Does the Community Reinvestment Act (CRA) cause banks to provide a subsidy to some mortgage borrowers?," Finance and Economics Discussion Series 2002-19, Board of Governors of the Federal Reserve System (U.S.).

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