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Press release content from PR Newswire. The AP news staff was not involved in its creation.

New Study Finds FinTech Lenders Are Reducing Discrimination in Mortgage Lending

November 18, 2021 GMT

CLEVELAND, Nov. 18, 2021 /PRNewswire/ -- A new study published by Case Western Reserve University and the American Enterprise Institute (AEI) found that technology-based FinTech mortgage lenders may be the key to reducing, and ultimately removing, racial bias and discrimination in lending.

The paper, ” The Impact of FinTech on Discrimination in Mortgage Lending,” provides evidence that FinTech mortgage lenders show little to no gap in the lending terms provided to Black and Hispanic borrowers after adjusting for GSE credit-risk pricing determinants and loan size, a key finding in light of a long history of racial discrimination and unequal outcomes from traditional lenders in the market.

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“The mortgage market has historically been plagued by racial discrimination, and recent data show ongoing disparities in the terms offered to minority borrowers by traditional lenders,” said Dr. Daniel Shoag, Associate Professor of Economics at Case Western University and co-author of the study. “This paper uses new, proprietary data to study discrepancies in terms offered to Black and Hispanic borrowers by FinTech lenders. Like prior literature, it finds that, unlike traditional lenders, FinTech loans do not show statistically significant differences in fee-adjusted terms.”

The mortgage market has changed rapidly in the past decade, largely due to the rise of FinTech lenders. To further highlight these developments and its widespread impact on reducing lending discrimination, Dr. Shoag will virtually present the paper’s findings and methodology at the National Tax Association’s annual conference as part of the Race Disparities in Housing session on Friday, November 19th.

“The rise of FinTech lenders has been a game-changer, and our findings also suggest this increased competition has led traditional lenders to adjust their business practices.” said Stan Veuger, co-author of the paper and senior economic policy fellow at AEI. “Our data suggest FinTech may not only reduce racial discrepancies in the mortgage market by providing credit directly on similar terms, but that the growth of these lenders may be inducing changes among non-FinTech lenders as well.”

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The full paper can be accessed here. To watch Dr. Shoag’s presentation at the National Tax Association Conference on Friday, November 19th at 4:10pm EST, please register as a conference attendee here.

View original content: https://www.prnewswire.com/news-releases/new-study-finds-fintech-lenders-are-reducing-discrimination-in-mortgage-lending-301428597.html

SOURCE Case Western Reserve University