Credit Card Redlining

Abstract

This paper evaluates the presence of racial disparities in the issuance of consumer credit. Using a unique and proprietary database of credit histories from a major credit bureau, this paper links location-based information on race with individual credit files. After controlling for the influence of such other place-specific factors as housing vacancy rates and general population demographics, the paper finds qualitatively large differences in the amount of credit offered to similarly qualified applicants living in Black versus White areas. The high quality of the data allow the paper to distinguish between issuer-provided credit (supply) and utilization of credit (demand). Additional estimates using a database of payday lending locations provide support for idea that issuers condition lending on location.

Keywords: Credit cards, racial disparities, access to credit, Black, redlining

JEL Classification: J15, G21