- Jackelyn Hwang, Michael Hankinson, and Kreg Steven Brown
- March 2019
- Link to Focus-34-4b (PDF)
- Link to Focus-Plus-34-4 (PDF)
This article provides an in-depth quantitative analysis of the effects of racial residential segregation on subprime loans and the recent housing foreclosure crisis. The authors find that metropolitan areas with higher levels of segregation had higher concentrations of subprime loans in minority neighborhoods compared to less segregated metropolitan areas. In particular, subprime loans appear to have been targeted to relatively large, geographically concentrated minority areas within segregated metropolitan areas. This article also includes a new feature, “Research to watch,” providing a brief overview of a forthcoming paper by Jacob W. Faber, which suggests that racial residential segregation creates easily identifiable markets for “alternative” financial services such as payday lenders and check cashers.