Political Voice and (Mortgage) Market Participation: Evidence from Minority Disenfranchisement

72 Pages Posted: 24 Jul 2021 Last revised: 22 May 2023

See all articles by Seongjin Park

Seongjin Park

University of Chicago - Booth School of Business

Arkodipta Sarkar

National University of Singapore

Nishant Vats

University of Chicago Booth School of Business

Date Written: July 23, 2021

Abstract

This paper documents the relationship between electoral disenfranchisement and economic decision-making. Using the dilution of Section 5 of the Voting Rights Act as a shock to the enfranchisement of Black Americans, we find a decline in mortgage origination for Black Americans, primarily driven by reduced applications. Additionally, we observe a flight of Black applications to Black lenders, indicating an increase in racial homophily. The findings suggest that disenfranchisement can lead to exclusion from markets and exacerbate racial homeownership gaps. Leveraging individual-level social survey data, we show trust in government and financial institutions plays a significant role in driving these effects.

JEL Classification: D12, D72, G21, G51, J15

Suggested Citation

Park, Seongjin and Sarkar, Arkodipta and Vats, Nishant, Political Voice and (Mortgage) Market Participation: Evidence from Minority Disenfranchisement (July 23, 2021). Available at SSRN: https://ssrn.com/abstract=3891961 or http://dx.doi.org/10.2139/ssrn.3891961

Seongjin Park

University of Chicago - Booth School of Business ( email )

5807 S Woodlawn Ave
Chicago, IL 60637
United States

Arkodipta Sarkar

National University of Singapore ( email )

Kent Ridge
119077
Singapore

Nishant Vats (Contact Author)

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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