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

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  • Zuchowski, David

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.

Suggested Citation

  • Zuchowski, David, 2025. "Sanctuary policies and the mortgage market behavior: Reducing uncertainty to promote financial inclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:jeborg:v:229:y:2025:i:c:s0167268124004839
    DOI: 10.1016/j.jebo.2024.106869
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    More about this item

    Keywords

    Sanctuary policies; Immigration policy; Mortgages; Financial inclusion;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • K37 - Law and Economics - - Other Substantive Areas of Law - - - Immigration Law
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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