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Title: The Digital Divide and Refinancing Inequality

Citation Type: Miscellaneous

Publication Year: 2022

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Abstract: Low-income households derive significantly less savings from mortgage refinancing than their wealthy counterparts. I document that the rise of refinancing inequality in the United States can be partially explained by the gap in access to modern information and communications technology. Using granular spatial variation of a large-scale broadband subsidy program, I show that broadband internet facilitates refinancing activity and reduces monthly mortgage payments. These effects are large and persistent, corresponding to a 5 percent increase in disposable income and up to $13,000 in total savings for low-income households. The results are in large part driven by underbanked census tracts with low access to physical bank branches. Lastly, I show that households that are likely to have low digital literacy benefit the most from the program. I discuss the implications of these findings for financial inclusion and monetary policy transmission.

Url: https://www.anderson.ucla.edu/sites/default/files/document/2022-10/Kim_DDRefi_Draft_Brownbag.pdf

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Authors: Kim, Edward T

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Data Collections: IPUMS USA

Topics: Housing and Segregation, Poverty and Welfare

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