Work

Sanctuary policies and the mortgage market behavior: Reducing uncertainty to promote financial inclusion

Year: 2024

Type: article

Abstract: This paper examines the impact of sanctuary policies on the financial inclusion of Hispanics in the U.S. mortgage market. By reducing local cooperation with federal immigration authorities, sanctuary policies reduce the risk of deportation and signal local acceptance of irregular immigrants and their families. This reduction in uncertainty for Hispanic borrowers and profit-maximizing lenders influences decision-making in financial markets. To identify the effect, I take advantage of the staggered implementation of county-level sanctuary policies between 2010 and 2021. Using an event study approach, I find evidence of a significant improvement in financial inclusion in counties that adopted local sanctuary policies. The results are consistent with the literature pointing to a trust spiral created by sanctuary policies and provide novel evidence that such local policies can serve as a tool for improving financial inclusion.

Source: Journal of Economic Behavior & Organization

DOI: 10.1016/j.jebo.2024.106869

Author: David Zuchowski

Institutions: RWI – Leibniz Institute for Economic Research, Universitat Rovira i Virgili

Language: English

Topic: Housing Market and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $2,770