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Racial Disparities in Credit Constraints in the Great Recession: Evidence from the UK

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  • John Gathergood

Abstract

This paper investigates racial disparities in household credit constraints using U.K. survey data. We find a widening disparity in the proportion of racial minority households reporting they face credit constraints compared with non-minority households over the period 2006-2009. By 2009 three times as many racial minority households faced credit constraints compared with White households. The difference in credit constraints across racial minority and non-minority households is not explained by a broad set of covariates. While crosssection variation in reported credit constraints might most likely reflect unobservables, we argue this time series variation is very unlikely to arise due to unobservables and is evidence of growing perceived disparity in credit access between racial groups over the period.

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Paper provided by University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) in its series Discussion Papers with number 11/09.

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Handle: RePEc:not:notcfc:11/09

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Keywords: credit constraints; race.;

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  1. John Y. Campbell & N. Gregory Mankiw, 1989. "Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 185-246 National Bureau of Economic Research, Inc.
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  17. repec:fth:harver:1435 is not listed on IDEAS
  18. Ethan Cohen-Cole, 2011. "Credit Card Redlining," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 700-713, May.
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Cited by:
  1. Jaanika Merik├╝ll, 2012. "Households borrowing during a creditless recovery," Bank of Estonia Working Papers wp2012-2, Bank of Estonia, revised 22 Feb 2012.

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