Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284039 
Year of Publication: 
2023
Series/Report no.: 
Staff Report No. 1079
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We find that banks differ in their propensity to lend to minorities based on their stakeholders' aversion to inequality. Using mortgage application data collected under the Home Mortgage Disclosure Act, we document a large and persistent cross-sectional variation in banks' propensity to lend to minorities. Inequality-averse banks have a higher propensity to lend to borrowers in high-minority areas and, within census tracts, to non-white borrowers compared to other banks. This higher propensity (i) is not explained by selection of applicants, (ii) allows these banks to retain and attract their inequality-averse stakeholders, and (iii) does not predict worse ex-post loan performance.
Subjects: 
inequality aversion
mortgage lending
minority borrowers
racial discrimination
JEL: 
G21
J15
E51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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