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- Title
The Cultural Affinity Hypothesis and Mortgage Lending Decisions.
- Authors
Hunter, William C.; Walker, Mary Beth
- Abstract
This paper conducts an empirical analysis of the cultural affinity hypothesis put forth by Calomiris, et aL (1994) in the mortgage lending market. This hypothesis implies that white loan officers, because of a lack of familiarity with mSrity applicant, will rely more heavily on characteristics that can be observed at low cost (e.g., objective loan application measures) in evaluating the credit worthiness of minority applicants relative to white applicants. Using a cleansed sample of 1,991 loan applications drawn from data collected by the Federal Reserve Bank of Boston, the results of the analysis were consistent with the cultural affinity hypothesis. In particular, we found that marginal black and Hispanic applicants appeared to be held to higher quantitative standards on such objective factors as credit history and debt obligation ratios than were similarly situated marginal white applicant
- Subjects
LOANS; REAL estate business; INTEREST rates; ACCOUNTS payable; FINANCE; CREDIT
- Publication
Journal of Real Estate Finance & Economics, 1996, Vol 13, Issue 1, p57
- ISSN
0895-5638
- Publication type
Article