IDEAS home Printed from https://ideas.repec.org/p/fip/fedcwp/1006.html
   My bibliography  Save this paper

Lending patterns in poor neighborhoods

Author

Listed:
  • Ben R. Craig
  • Francisca Richter

Abstract

Concentrated poverty has been said to impose a double burden on those that confront it. In addition to an individual's own financial constraints, institutions and social networks of poor neighborhoods can further limit access to quality services and resources for those that live there. This study contributes to the characterization of the relationship between subprime lending and poor neighborhoods by including a spatial dimension to the analysis, in an attempt to capture social effect differences in poor and less poor neighborhoods. The analysis is applied to 2004-2006 census tract level data in Cuyahoga County, home to Cleveland, Ohio, a region that features urban neighborhoods highly segregated by income and race. The patterns found in poor neighborhoods suggest stronger social interaction effects inducing subprime lending in comparison to less poor neighborhoods.

Suggested Citation

  • Ben R. Craig & Francisca Richter, 2010. "Lending patterns in poor neighborhoods," Working Papers (Old Series) 1006, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:1006
    DOI: 10.26509/frbc-wp-201006r
    as

    Download full text from publisher

    File URL: https://doi.org/10.26509/frbc-wp-201006r
    File Function: Persistent link
    Download Restriction: no
    File URL: https://www.clevelandfed.org/-/media/project/clevelandfedtenant/clevelandfedsite/publications/working-papers/2010/wp-1006r-lending-patterns-in-poor-neighborhoods-pdf.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.26509/frbc-wp-201006r?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. J. Paul Elhorst & Sandy Fréret, 2009. "Evidence Of Political Yardstick Competition In France Using A Two‐Regime Spatial Durbin Model With Fixed Effects," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 931-951, December.
    2. Lawrence E. Blume & William A. Brock & Steven N. Durlauf & Yannis M. Ioannides, 2010. "Identification of Social Interactions," Discussion Papers Series, Department of Economics, Tufts University 0754, Department of Economics, Tufts University.
    3. Paul Calem & Jonathan Hershaff & Susan Wachter, 2004. "Neighborhood patterns of subprime lending: Evidence from disparate cities," Housing Policy Debate, Taylor & Francis Journals, vol. 15(3), pages 603-622.
    4. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1449-1496.
    5. DeanS. Karlan, 2007. "Social connections and group banking," Economic Journal, Royal Economic Society, vol. 117(517), pages 52-84, February.
    6. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    7. R. Kelley Pace & James P. LeSage, 2010. "Omitted Variable Biases of OLS and Spatial Lag Models," Advances in Spatial Science, in: Antonio Páez & Julie Gallo & Ron N. Buliung & Sandy Dall'erba (ed.), Progress in Spatial Analysis, pages 17-28, Springer.
    8. Carolina Reid, 2010. "Sought or sold? Social embeddedness and consumer decisions in the mortgage market," Community Development Working Paper 2010-09, Federal Reserve Bank of San Francisco.
    9. repec:rre:publsh:v:39:y:2009:i:3:p:269-86 is not listed on IDEAS
    10. Giorgio Topa, 2001. "Social Interactions, Local Spillovers and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 261-295.
    11. Patricia A. McCoy, 2007. "The Home Mortgage Disclosure Act: A Synopsis and Recent Legislative History," Journal of Real Estate Research, American Real Estate Society, vol. 29(4), pages 391-398.
    12. Rajiv Sethi & Rohini Somanathan, 2001. "Racial Income Disparities and the Measurement of Segregation," Urban/Regional 0107001, University Library of Munich, Germany.
    13. Jane Cooley Fruehwirth, 2014. "Can Achievement Peer Effect Estimates Inform Policy? A View from Inside the Black Box," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 514-523, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Boyce, James K. & Zwickl, Klara & Ash, Michael, 2016. "Measuring environmental inequality," Ecological Economics, Elsevier, vol. 124(C), pages 114-123.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. Seungjoo Lee & Changhui Kang, 2015. "Labor Market Effects of School Ties: Evidence from Graduates of Leveled High Schools in South Korea," Korean Economic Review, Korean Economic Association, vol. 31, pages 199-237.
    3. Tatsiramos, Konstantinos & Cappellari, Lorenzo, 2011. "Friends’ networks and job finding rates," ISER Working Paper Series 2011-21, Institute for Social and Economic Research.
    4. Lin, Zhongjian & Hu, Yingyao, 2024. "Binary choice with misclassification and social interactions, with an application to peer effects in attitude," Journal of Econometrics, Elsevier, vol. 238(1).
    5. Adriaan R. Soetevent, 2006. "Empirics of the Identification of Social Interactions; An Evaluation of the Approaches and Their Results," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 193-228, April.
    6. Brock, William A. & Durlauf, Steven N., 2007. "Identification of binary choice models with social interactions," Journal of Econometrics, Elsevier, vol. 140(1), pages 52-75, September.
    7. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, September.
    8. Cartwright, Edward & Singh, Thomas B., 2018. "Observation and contagion effects in cooperation: An experimental investigation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 74(C), pages 151-160.
    9. Andreia Tolciu, 2010. "The Economics of Social Interactions: An Interdisciplinary Ground for Social Scientists?," Forum for Social Economics, Taylor & Francis Journals, vol. 39(3), pages 223-242, January.
    10. Mirta B. Gordon & Jean-Pierre Nadal & Denis Phan & Viktoriya Semeshenko, 2012. "Entanglement between Demand and Supply in Markets with Bandwagon Goods," Papers 1209.1321, arXiv.org, revised Dec 2012.
    11. Bet Caeyers, 2014. "Peer effects in development programme awareness of vulnerable groups in rural Tanzania," CSAE Working Paper Series 2014-11, Centre for the Study of African Economies, University of Oxford.
    12. Armin Falk & Urs Fischbacher & Simon Gaechter, 2009. "Living in Two Neighborhoods – Social Interaction Effects in the Lab," Discussion Papers 2009-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    13. Denis Phan, 2006. "Discrete Choices under Social Influence:Generic Properties," Post-Print halshs-00105857, HAL.
    14. Rafael Lalive & M. Alejandra Cattaneo, 2009. "Social Interactions and Schooling Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 457-477, August.
    15. Semih Tumen & Tugba Zeydanli, 2015. "Is Happiness Contagious? Separating Spillover Externalities from the Group-Level Social Context," Journal of Happiness Studies, Springer, vol. 16(3), pages 719-744, June.
    16. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
    17. Brian Krauth, 2000. "Social Interactions, Thresholds, and Unemployment in Neighborhoods," Econometric Society World Congress 2000 Contributed Papers 1638, Econometric Society.
    18. Dimant, Eugen, 2019. "Contagion of pro- and anti-social behavior among peers and the role of social proximity," Journal of Economic Psychology, Elsevier, vol. 73(C), pages 66-88.
    19. Marini, Annalisa, 2016. "Cultural Beliefs, Values and Economics: A Survey," MPRA Paper 69747, University Library of Munich, Germany.
    20. Brock,W.A. & Durlauf,S.N., 2003. "Multinomial choice with social interactions," Working papers 1, Wisconsin Madison - Social Systems.

    More about this item

    Keywords

    Poverty; Bank loans; Subprime mortgage;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcwp:1006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: 4D Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbclus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.