The Stock Market and Discrimination in Mortgage Lending
48 Pages Posted: 21 Oct 2019 Last revised: 29 Oct 2019
Date Written: September 28, 2019
This paper examines how the stock market affects discrimination in mortgage lending. Comparing banks that went public through initial public offering or acquisition with similar banks that failed to go public, we find that mortgage denial rates and interest rates for minority applicants decrease after a bank goes public, which remains robust to using a plausibly exogenous instrument for public status transitions. We find that the results are not driven by changes in banks' risk preferences or increased information disclosure after a bank goes public. Rather, the results are driven by the attenuation of ideological bias.
Keywords: Lending Discrimination, Public Status, HMDA, Stock Market
JEL Classification: G0, G21, G28, J16
Suggested Citation: Suggested Citation