The Stock Market and Discrimination in Mortgage Lending

48 Pages Posted: 21 Oct 2019 Last revised: 29 Oct 2019

See all articles by Yongqiang Chu

Yongqiang Chu

Belk College of Business, UNC Charlotte

Xiaonan (Flora) Ma

University of South Carolina, Darla Moore School of Business, Department of Finance, Students

Tim Zhang

University of Wyoming, College of Business

Date Written: September 28, 2019

Abstract

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

Chu, Yongqiang and Ma, Xiaonan (Flora) and Zhang, Tim, The Stock Market and Discrimination in Mortgage Lending (September 28, 2019). Available at SSRN: https://ssrn.com/abstract=3461061 or http://dx.doi.org/10.2139/ssrn.3461061

Yongqiang Chu (Contact Author)

Belk College of Business, UNC Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States
7046877695 (Phone)

Xiaonan (Flora) Ma

University of South Carolina, Darla Moore School of Business, Department of Finance, Students ( email )

1014 Greene Street
Columbia, SC 29208
United States

Tim Zhang

University of Wyoming, College of Business

1000 E. University Avenue
Department 3275
Laramie, WY 82071
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
38
Abstract Views
217
PlumX Metrics