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

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  • OZGUR 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. 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. Copyright (c) 2010 The Ohio State University.

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  • Ozgur Emre Ergungor, 2010. "Bank Branch Presence and Access to Credit in Low- to Moderate-Income Neighborhoods," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(7), pages 1321-1349, October.
    • Handle: RePEc:mcb:jmoncb:v:42:y:2010:i:7:p:1321-1349
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