The Dodd-Frank Act and its Impact on Community Bank Mortgage Lending

Schorgl, Margaret (2018) The Dodd-Frank Act and its Impact on Community Bank Mortgage Lending. Undergraduate thesis, under the direction of Thomas Garrett from Economics, University of Mississippi.

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Abstract

I investigate the impacts of additional regulatory burdens on community bank mortgage lending due to the Dodd-Frank Act. The Dodd-Frank Act, which was signed into federal law by President Barack Obama on July 21, 2010, was intended to protect consumers, promote financial stability, and reduce the risk associated with larger banks being “too-big-to-fail.” However, one criticism of the Act is that the increased regulations and compliance costs under the Act have made it increasingly difficult for smaller banks to survive. As a result, an unintended consequence of the Dodd-Frank Act is that smaller banks may issue fewer loans than they would in the absence of increased compliance costs. In this thesis I analyze the effect of the Dodd-Frank Act on mortgage lending by community banks before and after the Dodd-Frank Act to determine whether or not this legislation has negatively impacted community banks. I use online public data provided by the Home Mortgage Disclosure Act (HMDA) for a sample of community banks in Mississippi and Alabama. In addition, I evaluate the effect Dodd-Frank has had on small commercial banks’ return on average assets using national data from the Federal Reserve Bank of St. Louis. My hypothesis is that the average number of mortgage applications received, the average percentage of mortgage applications approved, the average value of mortgage applications received, the average value of mortgage applications approved, the average percentage of mortgage value approved, and the return on average assets for small commercial banks have all decreased in the years following the passage of the Dodd-Frank Act compared to years preceding the legislation. In accordance with my hypothesis, I find that all six variables decreased after the Dodd-Frank Act was enacted, thus providing evidence that community banks were adversely affected by the Dodd-Frank Act.

Item Type: Thesis (Undergraduate)
Creators: Schorgl, Margaret
Student's Degree Program(s): B.B.A. in Managerial Finance, Banking and Finance
Thesis Advisor: Thomas Garrett
Thesis Advisor's Department: Economics
Institution: University of Mississippi
Subjects: H Social Sciences > HG Finance
Depositing User: Margaret Schorgl
Date Deposited: 04 May 2018 20:07
Last Modified: 04 May 2018 20:23
URI: http://thesis.honors.olemiss.edu/id/eprint/1041

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