Building Societies and Credit Rationing: An Empirical Examination of Redlining

Redlining in the housing market occurs when building societies explicitly delineate in some way sections of cities where they will not usually grant mortgages. This paper considers redlining as part of the broader question of credit rationing, and derives a number of alternative possible explanations of the spatial distribution of mortgage finance. These are considered using data on house sales, and surveys of building society managers and house buyers in Glasgow. The conclusions drawn are that, in the place and time period studied, the distribution of building society finance cannot be explained to any great extent by a simple loan refusal/area lending process.