The Effect of Minority Bank Ownership on Minority Credit
Agustin Hurtado, Finance PhD student
The US economy exhibits a substantial and persistent racial wealth gap. According to the 2019 SCF, the median white household owned about $184,000 in family wealth, which compares to $23,000 and $38,000 for the median Black and Hispanic family, respectively. Housing is the principal asset held by most households, and despite their returns being higher than those of other assets, recent research shows that minorities face a gap in housing returns (relative to whites) that resembles the wealth gap. This return gap is explained by differential access to mortgage credit and foreclosures. This project has two parts. First, I explore the role of lenders in closing or widening the racial wealth gap through the channels mentioned earlier: Mortgage access and foreclosures. In preliminary work, I show that the minority character of lenders is critical in closing the mortgage access gap. Second, I aim to understand what mechanisms mediate these (and new) results: Ownership, governance, or loan officers’ information and biases.