Journal of Economic Perspectives: Vol. 12 No. 2 (Spring 1998)


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Evidence on Discrimination in Mortgage Lending

Article Citation

Ladd, Helen F. 1998. "Evidence on Discrimination in Mortgage Lending." Journal of Economic Perspectives, 12(2): 41-62.

DOI: 10.1257/jep.12.2.41


Much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination. Based on the legal definition, careful studies of loan denial rates, such as that done by the Federal Reserve Bank of Boston, represent an appropriate method for testing for discrimination by lenders. Based on that study, it is quite clear that lenders discriminate. The fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models. Nonetheless, more research on and discussion about the relationship between the race of the applicant and delinquencies, defaults, and losses would be desirable.

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Ladd, Helen F. (Sanford Institute of Public Policy, Duke U)

JEL Classifications

J71: Labor Discrimination
G21: Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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