Political Voice and (Mortgage) Market Participation: Evidence from Minority Disenfranchisement

This paper documents the link between political voice and economic decision-making. Combining the dilution of Section 5 of the Voting Rights Act as a shock to the enfranchisement of Black Americans with granular data on the US mortgage market, we document a 14.7% decline in mortgage origination for Black Americans. This is driven by a reduction in applications rather than changes in denial rate, suggesting their self-selection out of the mortgage market. Additionally, we observe a flight of Black demand to Black lenders, indicating an increase in racial homophily. Our results indicate that disenfranchisement reduces demand by increasing the fear of rejection, potentially emanating from the fear of discrimination.