Bank Branch Presence and Access to Credit in Low-to-Moderate Income Neighborhoods

Posted: 26 Jul 2010

Multiple version iconThere are 2 versions of this paper

Date Written: June 11, 2007

Abstract

Banks specialize in lending to informationally opaque borrowers by collecting soft information about them. Some researchers claim that this process requires a physical presence in the market to lower information collection costs. This paper provides evidence in support of this argument in the mortgage market for low-income borrowers whose access to credit is limited by their inadequate credit histories. Mortgage originations increase and interest spreads decline when there is a bank branch located in a low-to-moderate income neighborhood.

Keywords: relationship lending, mortgage market, branch presence

JEL Classification: D82, G21, G28, R31

Suggested Citation

Ergungor, Ozgur Emre, Bank Branch Presence and Access to Credit in Low-to-Moderate Income Neighborhoods (June 11, 2007). Journal of Money, Credit, and Banking, Vol. 42, No. 7, 2010. Available at SSRN: https://ssrn.com/abstract=1648821

Ozgur Emre Ergungor (Contact Author)

affiliation not provided to SSRN

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