Is Lending Discrimination Always Costly?

Posted: 25 Mar 1997

See all articles by Michael F. Ferguson

Michael F. Ferguson

University of Cincinnati - Department of Finance - Real Estate

Stephen R. Peters

Kansas State University - Department of Finance

Date Written: March 1997

Abstract

How can economically costly discrimination persist in a competitive market? Previous research into this question has focused on market imperfections which prevent competitive forces from eliminating the economically costly behavior. In this paper we show that lending discrimination is not always costly (to the lender). This has two important implications. First, lending discrimination may persist indefinitely. Second, tests for lending discrimination based on profits (or default rates) are inadequate.

JEL Classification: G21, G28, D45, J78

Suggested Citation

Ferguson, Michael F. and Peters, Stephen R., Is Lending Discrimination Always Costly? (March 1997). Available at SSRN: https://ssrn.com/abstract=8227

Michael F. Ferguson (Contact Author)

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States
513-556-7080 (Phone)

Stephen R. Peters

Kansas State University - Department of Finance ( email )

Manhattan, KS 66506
United States

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