Borrowing Constraints, Household Debt, and Racial Discrimination in Loan Markets

Posted: 26 Oct 1999

See all articles by John V. Duca

John V. Duca

Federal Reserve Banks - Federal Reserve Bank of Dallas; Oberlin College

Stuart S. Rosenthal

Syracuse University - Department of Economics

Abstract

Two-step selection methods are applied to the 1983 Survey of Consumer Finances to examine the extent to which borrowing constraints restrict household access to debt and the manner in which lenders vary debt limits across borrowers. Results indicate that 30 percent of young families are credit constrained, and that roughly half of these families would hold at least $12,000 (1982 dollars) more debt if borrowing constraints were relaxed. Debt limits increase with income and wealth, and are relaxed for families with a good credit history. In addition, minorities face tighter debt limits and are more likely to be credit constrained than white families.

JEL Classification: E51, J71, D12

Suggested Citation

Duca, John V. and Rosenthal, Stuart S., Borrowing Constraints, Household Debt, and Racial Discrimination in Loan Markets. Available at SSRN: https://ssrn.com/abstract=5858

John V. Duca

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Oberlin College

Oberlin, OH 44074
United States

Stuart S. Rosenthal (Contact Author)

Syracuse University - Department of Economics ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-3809 (Phone)

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