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Mortgage Redlining: Race, Risk, and Demand




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    • Sam Houston State University and the College of Business Administration, University of Houston, respectively. We thank Clifford Fry, William Kretlow, Archer McWhorter, Bernell Stone, Michael Pinegar, Grant McQueen, and particularly, George Benston and René Stulz for helpful comments.


Charges that geographical redlining is widely practiced by mortgage lenders and is associated with racial discrimination have received much attention. However, empirical research in this area has yet to document a convincing answer to the question of whether redlining even exists. Much of the previous research in this area has suffered from failure to account for variations in risk, and/or failure to adequately control for geographical differences in demand. This study addresses these problems in an effort to determine whether the disparity in the flow of mortgage credit can be explained by differences in risk and demand.

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