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

42 Pages Posted: 24 Jan 2007 Last revised: 9 Apr 2010

Multiple version iconThere are 2 versions of this paper

Date Written: January 8, 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. I provide evidence in support of this argument in the mortgage market for low-income borrowers. 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, access to credit, branch proximity

JEL Classification: D82, G21, G28, R31

Suggested Citation

Ergungor, Ozgur Emre, Bank Branch Presence and Access to Credit in Low-to-Moderate Income Neighborhoods (January 8, 2007). FRB of Cleveland Working Paper No. 06-16. Available at SSRN: https://ssrn.com/abstract=951197 or http://dx.doi.org/10.2139/ssrn.951197

Ozgur Emre Ergungor (Contact Author)

affiliation not provided to SSRN

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