Quantifying Discrimination: The Role of Race and Gender in the Awarding of Subprime Mortgage Loans

38 Pages Posted: 21 Apr 2010 Last revised: 10 Dec 2012

See all articles by Maya Sen

Maya Sen

Harvard University - Harvard Kennedy School (HKS)

Date Written: December 10, 2010


The recent subprime mortgage crisis has brought to the forefront the possibility of discriminatory lending on the basis of race or gender. I explore these claims using approximately 10 million observations collected by the federal government in 2006 through the Home Mortgage Disclosure Act. I address two possible theories of discrimination: (1) structural discrimination, which is that any discriminatory lending patterns are picking up the fact that minority borrowers went to different lenders, and (2) individual discrimination, which is the possibility that individual lenders discriminated against identically situated borrowers. The results provide some evidence of both. However, a sensitivity test to examine the effect of missing controls (such as credit score) finds that these racial differences could be explained by a 50% difference in negative credit attributes between blacks and whites under structural discrimination, and 17% difference under individual discrimination.

Keywords: subprime lending, discrimination

Suggested Citation

Sen, Maya, Quantifying Discrimination: The Role of Race and Gender in the Awarding of Subprime Mortgage Loans (December 10, 2010). Available at SSRN: https://ssrn.com/abstract=1593183 or http://dx.doi.org/10.2139/ssrn.1593183

Maya Sen (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

HOME PAGE: http://scholar.harvard.edu/msen

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