Working Paper

Strategic responses to bank regulation: evidence from HMDA data

Abstract: The intent of fair lending regulation is to encourage loans in low income areas and insure that loan decisions are based on economic criteria instead of noneconomic borrower characteristics. We evaluate situations in which banks may find it in their self interest to respond to regulation in a strategic manner intended to improve public relations and appease regulators rather than to adhere to the true spirit of the regulation. We find some evidence consistent with such behavior.

Keywords: Bank loans; Community Reinvestment Act of 1977; Home Mortgage Disclosure Act;

Status: Published in Journal of Financial Services Research, November 1997

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series, Issues in Financial Regulation

Publication Date: 1996

Number: WP-96-7