The Color of Hedge Fund Activism

43 Pages Posted: 25 Oct 2019 Last revised: 25 Nov 2019

See all articles by Yongqiang Chu

Yongqiang Chu

Belk College of Business, UNC Charlotte

Bo Huang

Renmin University of China - School of Finance

Chengsi Zhang

Renmin University of China - School of Finance

Date Written: October 17, 2019

Abstract

We examine the effect of hedge fund activism on mortgage lending. We find that banks targeted by hedge fund activism discriminate less against African American borrowers by approving more mortgage applications from African Americans. We also find that target banks charge lower interests on loans to African Americans. We show that these changes are not driven by changes in risk or risk preferences. Furthermore, we find that target banks are more likely to set up committees related to lending discrimination and are more likely to open new branches to address the discrimination issue after being targeted by activism.

Keywords: Hedge Fund Activism, Lending Discrimination, HMDA, Mortgage

JEL Classification: G0, G21, G28, J16

Suggested Citation

Chu, Yongqiang and Huang, Bo and Zhang, Chengsi, The Color of Hedge Fund Activism (October 17, 2019). Available at SSRN: https://ssrn.com/abstract=3471193 or http://dx.doi.org/10.2139/ssrn.3471193

Yongqiang Chu (Contact Author)

Belk College of Business, UNC Charlotte ( email )

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

Bo Huang

Renmin University of China - School of Finance

Ming De Main Building
Renmin University of China
Beijing, Beijing 100872
China

Chengsi Zhang

Renmin University of China - School of Finance ( email )

Room B906, Xianjin Builidng
Renmin University of China
Beijing, 100872
China

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