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The Effect of Minority Ownership of Financial Institutions on Mortgage Lending to Minority and Lower Income Home Seekers: A Cross-Section and Time-Series Analysis Author: Kristopher Rengert Dissertation School: Rutgers University Pages: 232 Publication Date: January 2002 Availability: Access Number: 10747 Abstract: This dissertation compares minority-owned (MO) banks and thrifts with similarly situated non-minority-owned (NMO) banks and thrifts in terms of their mortgage lending patterns to minority and lower-income (MLI) applicants and to applicants from underserved census tracts. Specifically, we examine 11 match sets of lending institutions in Chicago, IL; Washington, DC; Los Angeles, CA; and Miami, FL. Using data reported in accordance with the Home Mortgage Disclosure Act (HMDA), we use cross-tabulations and statistical models to investigate two sets of research questions. First, do MO mortgage lenders attract significantly different pools of mortgage loans applicants than NMO institutions with regard to minority and lower-income (MLI) applicants and applicants from underserved areas, and are they more or less likely to approve applications from these specific populations. Second, Have MO and NMO financial institutions' lending patterns to MLI households and underserved areas changed during the period 1992-1999, resulting in a decrease in the quality of application to MO financial institutions? The first question is investigated via cross-tabulations of 1996 HMDA data and probit analysis of the mortgage loan origination decision reported in 1996 HMDA data. Generally, MO institutions attract statistically significantly different pools of mortgage loan applications than NMO institutions. Their pools have a higher proportion of minority applicants from underserved areas and, less consistently from lower-income applicants. MO institutions are not more likely to originate loans to these types of applicants than are NMO institutions. The second research question is examined via two probit models and a
regression model examining HMDA data from 1992-1999. The first probit
model examines the effect of progression through the study period on the
likelihood of MO institutions' originating loan applications. The second
probit model examines the effect of the same influence on the likelihood
of loan applications going to MO institutions. The regression model examines
the effect of the same influence on the origination rates for MO and MO
institutions. Each of the models indicates conditions consistent with
the hypothesis that the quality of the pool of mortgage loan application
to MO institutions declined over the study period. |
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