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A Research Note on Discrimination in Mortgage Lending
Author(s) -
Epley Donald R.,
Cronan Timothy P.,
Perry Larry
Publication year - 1985
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00364
Subject(s) - logit , linear discriminant analysis , rank (graph theory) , loan , econometrics , ranking (information retrieval) , probit , probit model , multivariate probit model , actuarial science , economics , multivariate statistics , ordered probit , discriminant , logistic regression , statistics , mathematics , computer science , finance , artificial intelligence , combinatorics
This paper examines the hypothesis that mortgage lenders rank applications from better to worst and encourage the better ones to apply. A second ranking occurs when the application is ranked by the loan committee and funds are approved from the top of the list until exhausted. A theoretically correct procedure for analyzing the resulting multivariate ordinal data is the little known rank multiple discriminant analysis. Preliminary results have revealed that this technique produces a “best” model with fewer variables and a higher classification rate than the commonly known multiple discriminant analysis, logit, or probit.