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Article: Techniques in loan bias studies challenged.
- Article from:
- American Banker
- Article date:
- January 17, 1995
- Author:
CopyrightCOPYRIGHT 1995 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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WASHINGTON - To all the statistical studies suggesting racial bias in lending, Anthony Yezer has a simple reply: Phooey.
Mr. Yezer, an economist at George Washington University, maintains that the analytical techniques used for these studies are fatally flawed.
To make his point, Mr. Yezer created an "ideal" bank in his computer. The bank was fundamentally incapable of discrimination. Yet when he put the bank through the standard statistical test for lending bias, it flunked.
That, Mr. Yezer says, is "a false positive" - and one that should blow the credibility of the stand test. That test isolates every facto in the underwriting decision, except race. ...