Banking Market Concentration and Consumer Credit Constraints: Evidence from the 1983 Survey of Consumer Finances

19 Pages Posted: 29 Oct 2008 Last revised: 16 Mar 2010

See all articles by Daniel Bergstresser

Daniel Bergstresser

Brandeis International Business School

Date Written: February 2010

Abstract

This paper uses data from the 1983 Survey of Consumer Finances to test the relationship between the banks’ market power and households’ self-reported levels of credit constraints. The 1983 Survey was the last to identify households’ geographic location, making it useful for this analysis. There is evidence that borrowers, and particularly young borrowers, were less credit-constrained in markets where banks enjoyed more market power. Interest rates on consumer borrowing decreased more sharply with age in competitive markets than in concentrated markets. These results are consistent with the Sharpe (1990) and Petersen-Rajan (1995) models of information acquisition in credit markets.

Keywords: Banks, market structure, consumption, credit constraints

JEL Classification: G2

Suggested Citation

Bergstresser, Daniel B., Banking Market Concentration and Consumer Credit Constraints: Evidence from the 1983 Survey of Consumer Finances (February 2010). Available at SSRN: https://ssrn.com/abstract=1291354 or http://dx.doi.org/10.2139/ssrn.1291354

Daniel B. Bergstresser (Contact Author)

Brandeis International Business School ( email )

Waltham, MA 02454
United States
6174162324 (Phone)

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