1. Section 2 defines these terms more precisely. Studies using Home Mortgage Disclosure Act data have consistently found lower credit flows in minority than in nonminority neighborhoods. For example, Alicia Munnell, Lynn Browne, James McEneaney, and Geoffrey Tootell found, inMortgage Lending in Boston: Interpreting HMDA Data (Working Paper No. 92-7. Boston: Federal Reserve Bank of Boston, 1992), that African American applicants in Boston had a 60 percent greater chance of loan denial than equally creditworthy whites. And many audit studies have demonstrated racial bias by bankers, brokers, and auditors; see Cathy Cloud and George Galster, “What Do We Know About Racial Discrimination in Mortgage Markets?”Review of Black Political Economy 22 (1993): 101–120, and George Galster, “Racial Discrimination in Housing Markets during the 1980s: A Review of Audit Evidence.”Journal of Planning and Educational Research 9 (1990): 183–202.
2. A skeptical review of redlining studies is Richard Hula, “Neighborhood Development and Local Credit Markets.”Urban Affairs Quarterly 27 (1991): 249–267. Galster himself has pointed out the limits of empirical studies of bank lending; see “Housing Discrimination and Urban Poverty of African-Americans.”Journal of Housing Research 2 (1991): 87–124. A recent article skeptical of empirical findings of race effects is Charles Calomiris, Charles Kahn, and Stanley Longhofer, “Housing-Finance Intervention and Private Incentives: Helping Minorities and the Poor,”Journal of Money, Credit and Banking 26 (1994): 634–674.
3. George Galster, “Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions,”Housing Policy Debate 3 (1992): 639–683. The phrase quoted in the text appears on page 673.
4. While this paper is entirely theoretical, my own research with Veitch has emphasized the empirical, historical, and institutional aspects of race effects in credit markets in Los Angeles. See Gary Dymski and John Veitch, “Taking it to the Bank: Race, Credit, and Income in Los Angeles,” inResidential Apartheid: The American Legacy. Edited by Robert Bullard, J. Eugene Grigsby III and Charles Lee (Los Angeles: Center for Afro-American Studies, UCLA, 1994): 150–179; and Dymski and Veitch, “Financial Transformation and the Metropolis: Booms, Busts, and Banking in Los Angeles,”Environment and Planning A, forthcoming.
5. For example, the Fair Housing Act of 1968 provides, in section 3605(a): “It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race” (42 U.S.C., sec. 3601-3631 (1968)).