Taylor Begley is an Assistant Professor of Finance at the Olin Business School at Washington University in St. Louis. His research interests include financial intermediation, financial regulation, financial contracting, information economics, and corporate finance. Prior to moving to Washington University, Taylor earned a bachelor’s and master’s degree in Electrical Engineering at the University of Kentucky, and a PhD in Finance at the University of Michigan, Ross School of Business before working as an Assistant Professor at London Business School.
The incidence of mis-selling, fraud, and poor customer service by retail banks is significantly higher in markets with lower income and educational attainment. Further, areas with a higher share of minority population experience significantly worse outcomes even after controlling for factors such as income, education, and house price changes. Regulations aimed at improving access to credit to such areas are partly responsible for these findings. Specifically, low-to-moderate-income (LMI) areas targeted by the
Community Reinvestment Act have significantly worse outcomes and this effect is magnified further for LMI areas with high-minority population. The results highlight an unintended adverse consequence of such quantity-focused regulations on the quality of credit to poor and minority customers.