Search Results
Working Paper
The Long-Run Effects of the 1930s HOLC “Redlining” Maps on Place-Based Measures of Economic Opportunity and Socioeconomic Success
We estimate the long-run effects of the 1930s Home Owners Loan Corporation (HOLC) redlining maps on census tract-level measures of socioeconomic status and economic opportunity from the Opportunity Atlas (Chetty et al. 2018). We use two identification strategies to identify the long-run effects of differential access to credit along HOLC boundaries. The first compares cross-boundary differences along actual HOLC boundaries to a comparison group of boundaries that had similar pre-existing differences as the actual boundaries. A second approach uses a statistical model to identify boundaries ...
Working Paper
Student Loans, Access to Credit and Consumer Financial Behavior
This paper provides novel evidence that increased student loan debts, caused by rising tuitions, increase borrowers’ demand for additional consumer debt, while simultaneously restricting their ability to access it. The net effect of student loan debt on consumer borrowing varies by market, depending on whether the supply or demand channel dominates. In loosely underwritten credit markets, increased student loan debt causes borrowing to increase, while in tightly underwritten markets, increased student loan debt reduces the use of credit. These findings match predictions of a standard ...
Briefing
How Risky Are Young Borrowers?
Young borrowers are conventionally considered the most prone to making financial mistakes. This has spurred efforts to limit their access to credit, particularly via credit cards. Recent research suggests, however, that young borrowers are actually among the least likely to experience a serious credit card default. One reason why people obtain credit cards early in life may be to build a strong credit history.
Report
Unintended Consequences of "Mandatory" Flood Insurance
We document that the quasi-mandatory U.S. flood insurance program reduces mortgage lending along both the extensive and intensive margins. We measure flood insurance mandates using FEMA flood maps, focusing on the discreet updates to these maps that can be made exogenous to true underlying flood risk. Reductions in lending are most pronounced for low-income and low-FICO borrowers, implying that the effects are at least partially driven by the added financial burden of insurance. Our results are also stronger among non-local or more-distant banks, who have a diminished ability to monitor local ...
Periodic Essay
Reflections: Small Businesses
An enviable aspect of the U.S. economy around the globe is our spirit of innovation, entrepreneurship, ease of business entry and exit, and labor market flexibility. These are key attributes of a dynamic economy, one that offers opportunities for people to live good and productive lives. Entrepreneurship – setting up and running one’s own business – has always been part of the narrative of the American dream, an avenue to creating and growing wealth, contributing to the community, and leaving a legacy for one’s family.
Report
Home Lending Trends from Select Counties in Kentucky, Ohio, and Pennsylvania: 2018–2022
This series of reports examines home mortgages and refinances from 2018 through 2022, a period of great change. The reports look at seven large counties in Kentucky, Ohio, and Pennsylvania: Allegheny County, Pennsylvania (Pittsburgh); Cuyahoga County, Ohio (Cleveland); Fayette County, Kentucky (Lexington); Franklin County, Ohio (Columbus); Hamilton County, Ohio (Cincinnati); Lucas County, Ohio (Toledo); and Montgomery County, Ohio (Dayton).
Working Paper
The Lasting Impact of Historical Residential Security Maps on Experienced Segregation
We study the impact of the 1930s HOLC residential security maps on experienced segregation based on cell phone records which track visits out of and into home neighborhoods. We compare adjacent neighborhoods, one of which was assigned a lower grade for creditworthiness than the other. We use a sample of neighborhood borders which, based on estimated propensity scores, are likely to have been drawn for idiosyncratic reasons. Neighborhoods on the lower graded side of the border are associated with more visits to other historically lower graded destination neighborhoods. Today, these destination ...
Working Paper
A New Look at the Effects of the Interest Rate Ceiling in Arkansas
Arkansas has been a popular place to study the effects of rate ceilings because of its exceptionally low interest rate ceiling. This paper examines the effects of the Arkansas rate ceiling on credit use by nonprime consumers in Arkansas, who are especially vulnerable to credit rationing because of the low ceiling. We compare the level and composition of consumer debt of nonprime consumers in Arkansas with that of prime Arkansas consumers and also nonprime consumers in the neighboring states. We find that nonprime consumers in Arkansas are less likely to have consumer debt and, conditional on ...
Working Paper
A New Look at the Effects of the Interest Rate Ceiling in Arkansas
Arkansas has been a popular place to study the effects of rate ceilings because of its exceptionally low interest rate ceiling. This paper examines the effects of the Arkansas rate ceiling on credit use by risky nonprime Arkansas consumers, which are especially vulnerable to credit rationing because of the low ceiling. We compare the level and composition of consumer debt of nonprime consumers in Arkansas with that of prime Arkansas consumers and also nonprime consumers in the neighboring states. We find that nonprime Arkansas consumers are less likely to have consumer debt and, conditional ...