Are Racial Factors Important for the Allocation of Mortgage Money?

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Abstract
Abstract. A quasi‐experimental design is used to assess whether racial factors, net of important socioeconomic influences, are significantly related to the number of loans and amount of mortgage money loaned in Black and White neighborhoods in a midwestern city. Thirteen primarily Black census tracts are matched on socioeconomic characteristics with 13 White tracts using factor analysis and a method of matching known as “ecological similarity.” The latter uses an extension of Euclidian Distance to measure “closeness” between any pair of census tracts or factor scores derived from the factor solution. Results suggest that race is significantly related to both number of mortgage loans and amount of money loaned. Black tracts receive significantly less of each.

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