Discrimination in the Auto Loan Market
| Autor: | Alexander W. Butler, James Weston, Erik J. Mayer |
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| Rok vydání: | 2018 |
| Předmět: |
History
Polymers and Plastics media_common.quotation_subject Ceteris paribus Racism Industrial and Manufacturing Engineering Interest rate Competition (economics) Basis point Loan Economics Demographic economics Business and International Management Statistical discrimination health care economics and organizations Household debt media_common |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3301009 |
| Popis: | We provide evidence of discrimination in auto lending. Combining credit bureau records with borrower characteristics, we find that Black and Hispanic applicants’ loan approval rates are 1.5 percentage points lower, even controlling for creditworthiness. In aggregate, discrimination crowds out 80,000 minority loans each year. Results are stronger where racial biases are more prevalent and banking competition is lower. Minority borrowers pay 70 basis point higher interest rates, but default less ceteris paribus, consistent with racial bias rather than statistical discrimination. A major anti-discrimination enforcement policy initiated in 2013, but halted in 2018, reduced discrimination in interest rates by nearly 60%. |
| Databáze: | OpenAIRE |
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