The use of digital footprints in the US mortgage market |
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Authors: | D Dulani Jayasuriya Mohamed Ayaz Michael Williams |
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Institution: | 1. Accounting and Finance, University of Auckland, Auckland, New Zealand;2. New Zealand Superannuation Fund, Auckland, New Zealand;3. PricewaterhouseCoopers, Auckland, New Zealand |
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Abstract: | We study the rise of digital footprint (DF) users in the U.S. residential mortgage market. The proportion of lenders that use a borrower's DF has witnessed remarkable growth from 6% in 2013 to 34% in 2018 in a short span – according to our analysis. We show that the use of DFs can significantly reduce a lender's overall risk and that the use of DFs can result in considerable societal benefits, by reducing the overall discriminatory forces. In sum, we provide evidence that the informational advantage associated with using a borrower's DF far outweighs that of existing traditional lending methods. |
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Keywords: | digital footprint mortgage market fintech discriminatory lending information asymmetry residential mortgages |
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