“Consumer-lending discrimination in the FinTech Era” (2021), by Robert P. Bartlett et al. Business and Management research paper. Original abstract below, unchanged. No free PDF was found.

Consumer-lending discrimination in the FinTech Era

Robert P. Bartlett, Adair Morse, Richard Stanton et al. · May 28, 2021 · Business and Management

Abstract

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 Latinx/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 disparities 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.

Source page DOI: 10.1016/j.jfineco.2021.05.047