The incidence of mis-selling, fraud, and poor customer service by retail banks is significantly higher in markets with lower income and educational attainment. Further, areas with a higher share of minority population experience significantly worse outcomes even after controlling for factors such as income, education, and house price changes. Regulations aimed at improving access to credit to such areas are partly responsible for these findings. Specifically, low-to-moderate-income (LMI) areas targeted by the Community Reinvestment Act have significantly worse outcomes and this effect is magnified further for LMI areas with high-minority population. The results highlight an unintended adverse consequence of such quantity-focused regulations on the quality of credit to poor and minority customers.

We find that under risk-insensitive loan pricing -- a feature present in many government programs --  marginal credit quality borrowers are less likely to receive credit. By restricting price flexibility, marginal applicants that would likely receive a loan at a higher interest rate are instead denied credit altogether. Our particular setting is the Small Business Administration's disaster-relief home loan program, where risk-based pricing is absent, but screening on credit quality remains. We find that this program denies more loans in areas with larger shares of minorities, subprime borrowers, and higher income inequality, even relative to private market denial rates. Thus, despite ensuring "fair'' prices, risk-insensitive pricing may lead to "unfair'' access to credit. As a consequence, the government's own lending program ends up denying credit to minority and poor borrowers at a higher rate than private markets.

The share of mortgage lending by four largest banks (Big4) dropped from about 30% to 23% of the market from 2009-2013 following the crisis-related fines and heightened regulatory burden. Aggregate patterns suggest this gap was filled by shadow banks and fintech lenders whose respective shares rose from 24% to 30% and from 2% to 7%. Despite this secular rise in nonbank lending, we present new cross-sectional facts showing that small banks were twice as responsive as shadow banks to fill the gap left by the Big4 retreat, and more than four-times more responsive than fintech lenders. Using granular lender-county data, we use within-bank variation and county fixed effects to show a strong reallocation of lending for small banks toward areas where the Big4 withdrew. We provide evidence that institutional features of the mortgage market and consumer preference for banks play important roles in our findings. Our results highlight the continued importance of small banks despite the rise of shadow banks and financial technology disruption.

We use individual-level data to quantify the effect of getting a mortgage on non-mortgage credit outcomes. We use a regression discontinuity design and find that individuals that transition to homeownership increase their credit card and auto balances by $8,300 and $14,800, suggesting a debt spillover effect from home ownership. This increase in debt is equivalent to 13% of the average mortgage loan, and we provide evidence that it is mainly driven by a change in credit demand. We find that this increase in debt is driven by individuals with higher financial experience, while their overall ability to service their debt remains unchanged. In contrast, low-experience individuals do not increase their debt, but are relatively more likely to experience a deterioration in their financial health. Taken together, these results highlight the role financial experience plays in managing the debt burden associated to a new home.