Authors: Matteo Crosignani and Hanh Le
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Staff Reports
Stakeholders’ Aversion to Inequality and Bank Lending to Minorities
Number 1079
November 2023
November 2023
JEL classification: G21, J15, E51
We find that banks differ in their propensity to lend to minorities based on their stakeholders’ aversion to inequality. Using mortgage application data collected under the Home Mortgage Disclosure Act, we document a large and persistent cross-sectional variation in banks’ propensity to lend to minorities. Inequality-averse banks have a higher propensity to lend to borrowers in high-minority areas and, within census tracts, to non-white borrowers compared to other banks. This higher propensity (i) is not explained by selection of applicants, (ii) allows these banks to retain and attract their inequality-averse stakeholders, and (iii) does not predict worse ex-post loan performance.
Author Disclosure Statement(s)
Matteo Crosignani
I, Matteo Crosignani, author of the NY FED Staff Report submission “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities” declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.htm.
Hanh Le
I, Hanh Le, co-author of the NY FED Staff Report submission “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities” declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.htm.
I, Matteo Crosignani, author of the NY FED Staff Report submission “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities” declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.htm.
Hanh Le
I, Hanh Le, co-author of the NY FED Staff Report submission “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities” declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.htm.
Suggested Citation:
Crosignani, Matteo and Hanh Le. 2023. “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities.” Federal Reserve Bank of New York Staff Reports, no. 1079, November. https://doi.org/10.59576/sr.1079
Crosignani, Matteo and Hanh Le. 2023. “Stakeholders’ Aversion to Inequality and Bank Lending to Minorities.” Federal Reserve Bank of New York Staff Reports, no. 1079, November. https://doi.org/10.59576/sr.1079
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