Branch location choice: Do lenders discriminate?
This paper examines the factors that affect branch location choice of depository lenders. Consistent with previous studies, the tract level analysis in this paper finds a strong negative impact of neighborhood income and minority composition on individual access to depository branches even after controlling for neighborhood unobservables. In the lender level analysis the negative impact of income and race does not persist once neighborhood fixed effects are included. This raises an important incongruity between individual (lender) and aggregate (tract) level analysis. The paper suggests that this inconsistency is related to the logic of disparate treatment and disparate impact by showing how a neighborhood with low income and high minority composition may end up with fewer branches (a disparate impact) even when no individual lender makes branch location choice based on income or race (no disparate treatment).
Volume (Year): 35 (2010)
Issue (Month): 30 (July-December)
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- Stephen L. Ross & John Yinger, 2002. "The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182289, June.
- Xiaoming Li & AKM Rezaul Hossain & Stephen L. Ross, 2010. "Neighborhood Information Externalities and the Provision of Mortgage Credit," Working papers 2010-10, University of Connecticut, Department of Economics.
- Felici Roberto & Pagnini Marcello, 2005. "Distance, bank heterogeneity and entry in local banking markets," Temi di discussione (Economic working papers) 557, Bank of Italy, Economic Research and International Relations Area.
- Drew Dahl & Douglas D. Evanoff & Michael F. Spivey, 2000. "Does the Community Reinvestment Act influence lending? an analysis of changes in bank low-income mortgage activity," Working Paper Series WP-00-6, Federal Reserve Bank of Chicago.
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