Lending Patterns in Poor Neighborhoods

Concentrated poverty has been said to impose a double burden on those that confront it. In addition to an individual's own financial constraints, institutions and social networks of poor neighborhoods can further limit access to quality services and resources for those that live there. This study contributes to the characterization of the relationship between subprime lending and poor neighborhoods by including a spatial dimension to the analysis, in an attempt to capture social effect differences in poor and less poor neighborhoods. The analysis is applied to 2004-2006 census tract level data in Cuyahoga County, home to Cleveland, Ohio, a region that features urban neighborhoods highly segregated by income and race. The patterns found in poor neighborhoods suggest stronger social interaction effects inducing subprime lending in comparison to less poor neighborhoods