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Bank branch presence and access to credit in low-to-moderate income neighborhoods

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  • O. Emre Ergungor

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. The author provides 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.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 0616.

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Date of creation: 2006
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Handle: RePEc:fip:fedcwp:0616

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Keywords: Mortgage loans ; Branch banks;

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Citations

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Cited by:
  1. O. Emre Ergungor, 2009. "Foreclosures in Ohio: does lender type matter?," Proceedings, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, issue Jan.
  2. O. Emre Ergungor & Stephanie Moulton, 2011. "Do bank branches matter anymore?," Economic Commentary, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, issue Aug.
  3. Kristle Romero Cort├ęs, 2012. "Did local lenders forecast the bust? Evidence from the real estate market," Working Paper 1226, Federal Reserve Bank of Cleveland.
  4. Ozgur Emre Ergungor & Stephanie Moulton, 2011. "Beyond the transaction: depository institutions and reduced mortgage default for low-income homebuyers," Working Paper 1115, Federal Reserve Bank of Cleveland.

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