| Summary: | I examine the effect of the change from incurred loss model to the current expected credit loss (CECL) model on mortgage lending. I find that the extent that the CECL model under ASC 326 exacerbates the lending disparities for low-income and minority (LIM) borrowers is dependent on banks' choice of relief. I find banks who opted for regulatory relief that defers CECL's effect on regulatory capital, but not net income, decreased lending to LIM borrowers in preparation for and after enactment of ASC 326. In contrast, banks who opted for statutory relief that defers CECL's effect on both regulatory capital and net income did not reduce lending to LIM borrowers. Banks who opted for no relief decreased lending to LIM borrowers after enactment of ASC 326. This study highlights how the choice of relief (regulatory, statutory or no relief), which is heavily influenced by investor pressure, can have real consequences for LIM borrowers. A Dissertation submitted to the Department of Accounting in partial fulfillment of the requirements for the degree of Doctor of Philosophy. February 29, 2024. Includes bibliographical references. Sami Keskek, Professor Directing Dissertation; Yingmei Cheng, University Representative; Anne Christine Ehinger, Committee Member; Landon M. Mauler, Committee Member.
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