Credit Card Redlining Revisited
AbstractUsing a proprietary data set of credit bureau records, Cohen-Cole (2011) finds evidence that lenders are using the racial composition of a borrower's neighborhood to set credit limits on revolving accounts. Using the same credit bureau data, I revisit this work and reach two main findings. First, an undocumented decision in constructing the variables appears to have introduced a distortion that is highly correlated with neighborhood racial composition and appears to increase the size of the reported disparity. Second, when neighborhood income is controlled for, the results presented as evidence of redlining disappear.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics and Statistics.
Volume (Year): 93 (2011)
Issue (Month): 2 (May)
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Other versions of this item:
- Kenneth P. Brevoort, 2009. "Credit card redlining revisited," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2009-39, Board of Governors of the Federal Reserve System (U.S.).
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- John Gathergood, .
"Racial Disparities in Credit Constraints in the Great Recession: Evidence from the UK,"
Discussion Papers, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)
11/09, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Gathergood John, 2011. "Racial Disparities in Credit Constraints in the Great Recession: Evidence from the UK," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 11(1), pages 1-32, September.
- Song Han & Benjamin J. Keys & Geng Li, 2011. "Credit supply to personal bankruptcy filers: evidence from credit card mailings," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2011-29, Board of Governors of the Federal Reserve System (U.S.).
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