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Discrimination in mortgage lending: Evidence from a correspondence experiment

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  • Hanson, Andrew
  • Hawley, Zackary
  • Martin, Hal
  • Liu, Bo

Abstract

We design and implement an experimental test for differential response by mortgage loan originators (MLOs) to requests for information about loans. Our e-mail correspondence experiment is designed to analyze differential treatment by client race and credit score. Our results show net discrimination by 1.8% of MLOs through non-response. We also find that MLOs offer more details about loans and are more likely to send follow up correspondence to whites. The effect of being African American on MLO response is equivalent to the effect of having a credit score that is 71 points lower.

Suggested Citation

  • Hanson, Andrew & Hawley, Zackary & Martin, Hal & Liu, Bo, 2016. "Discrimination in mortgage lending: Evidence from a correspondence experiment," Journal of Urban Economics, Elsevier, vol. 92(C), pages 48-65.
    • Handle: RePEc:eee:juecon:v:92:y:2016:i:c:p:48-65
    DOI: 10.1016/j.jue.2015.12.004
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    References listed on IDEAS

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    More about this item

    Keywords

    Discrimination; Field experiment; Mortgage lending; Race;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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