Color, Loan Approval, and Crimes: The Dark Side of Mortgage Market Deregulation

30 Pages Posted: 12 Jul 2021

See all articles by Tse-Chun Lin

Tse-Chun Lin

The University of Hong Kong - Faculty of Business and Economics

Mingzhu Tai

The University of Hong Kong, Faculty of Business and Economics

Jiayu Zhou

The University of Hong Kong - The University of Hong Kong Faculty of Business and Economics, Students

Date Written: July 11, 2021

Abstract

This paper documents that racial differences in credit distribution during a general mortgage credit expansion can lead to unintended negative consequences on crime. Exploiting a federal mortgage market deregulation, we find a significant increase in mortgage approval to white borrowers, while the approval rate to black borrowers is unchanged. More importantly, the local housing boom induced by this credit expansion leads to an increase in money-related crime rates of black offenders. The results highlight an unintended adverse consequence of credit expansion on the welfare of the minorities.

Keywords: discrimination; credit expansion; housing price; crime

JEL Classification: G21, G28, D62, J15

Suggested Citation

Lin, Tse-Chun and Tai, Mingzhu and Zhou, Jiayu, Color, Loan Approval, and Crimes: The Dark Side of Mortgage Market Deregulation (July 11, 2021). Available at SSRN: https://ssrn.com/abstract=3884276 or http://dx.doi.org/10.2139/ssrn.3884276

Tse-Chun Lin (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Mingzhu Tai

The University of Hong Kong, Faculty of Business and Economics ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong

Jiayu Zhou

The University of Hong Kong - The University of Hong Kong Faculty of Business and Economics, Students ( email )

Hong Kong
Japan

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
23
Abstract Views
259
PlumX Metrics