☆ 4.6 Article

Consumer-lending discrimination in the FinTech Era *

JOURNAL OF FINANCIAL ECONOMICS (2022)

期刊

JOURNAL OF FINANCIAL ECONOMICS

卷 143, 期 1, 页码 30-56

出版社

ELSEVIER SCIENCE SA

DOI: 10.1016/j.jfineco.2021.05.047

关键词

Discrimination; FinTech; GSE mortgages; Credit scoring; Algorithmic underwriting; Big-data lending; Platform loans; Statistical discrimination; Legitimate business necessity

类别

Business, Finance Economics

向作者/读者索取更多资源

Protocol

Reagent

智能总结 New
摘要

U.S. fair-lending law prohibits lenders from making credit determinations that disparately affect minority borrowers based on characteristics unrelated to creditworthiness. Research shows that risk-equivalent Lat-inx/Black borrowers pay significantly higher interest rates in high-minority-share neighborhoods, resulting in over $450 million yearly loss for minority borrowers. FinTech lenders' rate disparities were similar to non-Fintech lenders for GSE mortgages, but lower for FHA mortgages issued in 2009-2015 and FHA refi mortgages issued in 2018-2019.

U.S. fair-lending law prohibits lenders from making credit determinations that disparately affect minority borrowers if those determinations are based on characteristics unrelated to creditworthiness. Using an identification under this rule, we show risk-equivalent Lat-inx/Black borrowers pay significantly higher interest rates on GSE-securitized and FHA-insured loans, particularly in high-minority-share neighborhoods. We estimate these rate differences cost minority borrowers over $450 million yearly. FinTech lenders' rate dispar-ities were similar to those of non-Fintech lenders for GSE mortgages, but lower for FHA mortgages issued in 2009-2015 and for FHA refi mortgages issued in 2018-2019. (c) 2021 Elsevier B.V. All rights reserved.

作者

我是这篇论文的作者

点击您的名字以认领此论文并将其添加到您的个人资料中。

评论

主要评分

4.6

评分不足

次要评分

新颖性

-

重要性

-

科学严谨性

-

评价这篇论文

推荐

Article Economics

Do algorithms discriminate against African Americans in lending?

Jeremie Bertrand, Laurent Weill

Summary: Research shows the persistence of discrimination against African American borrowers in peer-to-peer lending, with higher rejection rates, larger loan spreads, and shorter loan maturities in areas with higher proportions of African American residents. Discrimination also affects Native American and Asian borrowers in peer-to-peer lending. The expansion of peer-to-peer lending does not end discrimination in lending.

ECONOMIC MODELLING (2021)

添加到收藏夹

Article Economics

In the shadow of big tech lending

Yanting Chen, Yingwei Dong, Jiayin Hu

Summary: We investigate the impact of Big Tech lending on non-bank traditional lenders, finding that competition from Big Tech worsens the performance of branches facing stronger competition, reducing the number of borrowers and loan amounts. Moreover, branches in highly penetrated cities tighten lending standards by reducing loan-to-value ratios, indicating cream-skimming behavior by Big Techs. These findings highlight the changes and responses of non-bank traditional lending in the Big Tech era.

CHINA ECONOMIC REVIEW (2023)

添加到收藏夹

Article Development Studies

The Racial Landscape of Fintech Mortgage Lending

Tyler Haupert

Summary: Despite limited understanding of racial patterns in fintech mortgage lending, this study examines disparities in lending outcomes between White and non-White applicants, as well as neighborhoods of different racial compositions in the United States. The results suggest that fintech lenders have lower approval rates for non-White applicants, particularly Latinos. Additionally, both fintech and traditional lenders distribute subprime credit to non-White neighborhoods at significantly higher rates than to White neighborhoods.

HOUSING POLICY DEBATE (2022)

添加到收藏夹

Article Management

The Causal Impact of Distance on Bank Lending

Christoph Herpfer, Aksel Mjos, Cornelius Schmidt

Summary: Our study investigates the impact of physical distance on corporate lending, using infrastructure improvements as shocks to travel time. We find that lower travel time increases the likelihood of establishing new banking relationships, indicating that there is an economic surplus from reduced transaction costs. In existing lending relationships, banks capture part of this surplus by raising interest rates, particularly when they have more bargaining power. However, reductions in travel time to competing banks have the opposite effects. Banks benefit from improved infrastructure by attracting more clients, and lenders relying on technology are not sensitive to changes in distance.

MANAGEMENT SCIENCE (2022)

添加到收藏夹

Article Urban Studies

Fintech's relationship with subprime lending in immigrant gateway metropolitan areas

Tyler Haupert, C. Aujean Lee

Summary: This article examines the impact of financial technology lending in immigrant gateway metropolitan areas. The study finds that these areas have higher rates of subprime lending, and the proportion of Asian and Latinx residents affects the distribution of subprime loans by different types of lenders.

JOURNAL OF URBAN AFFAIRS (2022)

添加到收藏夹

Article Economics

Big data pricing in marketplace lending and price discrimination against repeat borrowers: Evidence from China

Geran Tian, Weixing Wu

Summary: In this study, we examined the transition from auction-based pricing to big data pricing on a major marketplace lending platform in China. Our findings indicate that big data pricing lowers the average interest rate, but borrowers with delinquency or default histories are charged higher rates. Interestingly, even repeat borrowers who have been consistently repaying their loans experience increasing interest rates. Additional analysis reveals that repeat borrowers tend to have lower income and education levels. Furthermore, investor returns become less dispersed after the implementation of big data pricing, possibly due to the presence of more homogeneous loans in the market. The implications of these findings are discussed.

CHINA ECONOMIC REVIEW (2023)

添加到收藏夹

Article Business, Finance

The use of digital footprints in the US mortgage market

D. Dulani Jayasuriya, Mohamed Ayaz, Michael Williams

Summary: We study the growth of digital footprint users in the U.S. residential mortgage market. According to our analysis, the proportion of lenders using a borrower's digital footprint has increased significantly from 6% in 2013 to 34% in 2018 in a short period of time. Our research shows that the use of digital footprints can effectively reduce a lender's overall risk and contribute to considerable societal benefits by reducing discriminatory forces. Overall, we provide evidence that the informational advantage gained from using a borrower's digital footprint far exceeds that of traditional lending methods.

ACCOUNTING AND FINANCE (2023)

添加到收藏夹

Article Economics

Investigating bank lending discrimination in the US using CRA-rated banks' HMDA loan data

Ken B. B. Cyree, Drew B. B. Winters

Summary: This study examines the potential loan discrimination against minorities in banks rated Outstanding for CRA compliance using HMDA data from 2007 to 2016. Despite being highly rated, these banks were found to have statistical discrimination in loan approvals for Asian, Black, Hispanic, and women borrowers. Additionally, they exhibited statistical discrimination against white males without co-applicants. This study suggests that the models or HMDA data may not be well-suited for studying lending discrimination.

PUBLIC CHOICE (2023)

添加到收藏夹

Article Business

Inequalities in Dealers' Interest Rate Markups? A Gender-and Race-Based Analysis

O. Cem Ozturk, Cheng He, Pradeep K. Chintagunta

Summary: This study reveals gender and racial gaps in auto financing in the United States, with women and minorities paying higher interest rate markups compared to men and nonminorities. The gaps decrease over time and are more pronounced in areas with lower education levels, no trade-ins, and fewer financial institutions.

MARKETING SCIENCE (2023)

添加到收藏夹

Article Business, Finance

Female small business owners in China: Discouraged, not discriminated

Mustafa Caglayan, Oleksandr Talavera, Lin Xiong

Summary: Using a unique dataset from a P2P digital loan platform in China, it is shown that female entrepreneurs are more likely to be discouraged from applying for funding after a failed attempt compared to male entrepreneurs. This discouragement persists across different regional development levels and is particularly prominent among those who need working capital. Disclosing more information during the application process would help those discouraged from reapplying for funding.

JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY (2022)

添加到收藏夹

Article Development Studies

Credit Availability for Minority Business Owners in an Evolving Credit Environment

Brett Barkley, Mark Schweitzer

Summary: Disparities in access to small business financing persist despite the presence of fintech lenders. The pandemic did not significantly impact credit access trends. The Paycheck Protection Program provided unprecedented support for small businesses, but minority-owned businesses received a smaller fraction of the funds they applied for.

ECONOMIC DEVELOPMENT QUARTERLY (2023)

添加到收藏夹

Article Computer Science, Artificial Intelligence

Algorithmic discrimination in the credit domain: what do we know about it?

Ana Cristina Bicharra Garcia, Marcio Gomes Pinto Garcia, Roberto Rigobon

Summary: The widespread usage of machine learning systems and econometric methods in the credit domain has transformed the decision-making process for evaluating loan applications, but it often consolidates existing bias and prejudice. Therefore, the interest in identifying, preventing, and mitigating algorithmic discrimination has grown exponentially in many areas.

AI & SOCIETY (2023)

添加到收藏夹

暂无数据

Article Business, Finance

Artificial intelligence, firm growth, and product innovation

Tania Babina, Anastassia Fedyk, Alex He, James Hodson

Summary: This study examines the use and economic impact of AI technologies, measuring firm-level AI investments using employee resumes. The findings show a significant increase in AI investments across industries. Companies investing in AI experience higher growth in sales, employment, and market valuations, primarily driven by increased product innovation. The growth powered by AI is concentrated among larger firms and is associated with higher industry concentration.

JOURNAL OF FINANCIAL ECONOMICS (2024)

添加到收藏夹

Article Business, Finance

Monetary policy transmission in segmented markets

Jens Eisenschmidt, Yiming Ma, Anthony Lee Zhang

Summary: Repo markets play a crucial role in transmitting monetary policy. In the European market, a small number of dealers with significant market power dominate over-the-counter trades, restricting access for non-dealer banks and non-banks. This concentration of power results in inefficient and unequal transmission of the ECB's policy rate. Facilitating access to centralized trading platforms or providing a secured deposit facility with the central bank could enhance the efficiency of monetary policy transmission and reduce dispersion in repo rates among customers.

JOURNAL OF FINANCIAL ECONOMICS (2024)

添加到收藏夹

Article Business, Finance

Liquidity regulation and banks: Theory and evidence

Suresh Sundaresan, Kairong Xiao

Summary: This paper investigates the effects of liquidity regulation on the banking system and finds that the current quantity-based liquidity rule reduces banks' liquidity risks but also leads to a decrease in bank lending and a migration of liquidity risks to non-regulated banks. The analysis suggests that the current liquidity rule can improve the unregulated equilibrium but may have distortionary effects. Introducing a price-based mechanism through a central bank committed liquidity facility could enhance the current quantity-based regulation.

JOURNAL OF FINANCIAL ECONOMICS (2024)

添加到收藏夹

© Peeref 2019-2024. All rights reserved.