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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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    Cited by:

    1. Scott W. Hegerty, 2016. "Commercial bank locations and “banking deserts”: a statistical analysis of Milwaukee and Buffalo," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 253-271, January.
    2. Cortes, Kristle Romero & Strahan, Philip E., 2014. "Tracing Out Capital Flows: How Financially Integrated Banks Respond to Natural Disasters," Working Paper 1412, Federal Reserve Bank of Cleveland, revised 01 Oct 2015.
    3. Alimukhamedova, Nargiza & Hanousek, Jan, 2015. "What Do We Know about Microfinance at Macro Glance?," CEPR Discussion Papers 10484, C.E.P.R. Discussion Papers.
    4. Jason Allen & H. Evren Damar & David Martinez-Miera, 2012. "Consumer Bankruptcy and Information," Staff Working Papers 12-18, Bank of Canada.
    5. Knut Are Aastveit & Andrea Carriero & Todd E. Clark & Massimiliano Marcellino, 2017. "Have Standard VARS Remained Stable Since the Crisis?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(5), pages 931-951, August.
    6. Jason Allen & H. Evren Damar & David Martinez-Miera, 2016. "Consumer Bankruptcy, Bank Mergers, and Information," Review of Finance, European Finance Association, vol. 20(4), pages 1289-1320.
    7. repec:eee:finsta:v:33:y:2017:i:c:p:1-22 is not listed on IDEAS
    8. repec:eee:jfinec:v:125:y:2017:i:1:p:182-199 is not listed on IDEAS
    9. Wardrip, Keith & Hunt, Robert M., 2013. "Residential Migration, Entry, and Exit as Seen Through the Lens of Credit Bureau Data," Payment Cards Center Discussion Paper 13-4, Federal Reserve Bank of Philadelphia.
    10. Noelia Camara & David Tuesta & Pablo Urbiola Ortun, 2015. "Extending access to the formal financial system: the banking correspondent business model," Working Papers 1510, BBVA Bank, Economic Research Department.
    11. Ergungor, O. Emre & Moulton, Stephanie, 2011. "Do bank branches matter anymore?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    12. Carpenter, Ann & Lueders, Abram & Thayer, Chris, 2017. "Informal Homeownership Issues: Tracking Contract for Deed Sales in the Southeast," FRB Atlanta Community and Economic Development Discussion Paper 2017-2, Federal Reserve Bank of Atlanta.
    13. O. 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.
    14. Noelia Camara & David Tuesta & Pablo Urbiola, 2015. "Extendiendo el acceso al sistema financiero formal: el modelo de corresponsales bancarios," Working Papers 1511, BBVA Bank, Economic Research Department.
    15. Kristin Turney & Daniel Schneider, 2016. "Incarceration and Household Asset Ownership," Demography, Springer;Population Association of America (PAA), vol. 53(6), pages 2075-2103, December.
    16. M. Dietsch & C. Welter-Nicol, 2014. "Do LTV and DSTI caps make banks more resilient?," Débats économiques et financiers 13, Banque de France.
    17. O. Emre Ergungor, 2009. "Foreclosures in Ohio: does lender type matter?," Proceedings, Federal Reserve Bank of San Francisco, issue Jan.
    18. Jason Allen & Kiana Basiri, 2016. "The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit," Staff Working Papers 16-26, Bank of Canada.
    19. Sabrina Bunyan & Alan Collins & Gianpiero Torrisi, 2016. "Analysing Household and Intra-urban Variants in the Consumption of Financial Services: Uncovering “Exclusion” in an English City," Journal of Consumer Policy, Springer, vol. 39(2), pages 199-221, June.
    20. Scott Hegerty, 2016. "Commercial bank locations and “banking deserts”: a statistical analysis of Milwaukee and Buffalo," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 253-271, January.
    21. Kristle Romero Cortés, 2012. "Did local lenders forecast the bust? Evidence from the real estate market," Working Paper 1226, Federal Reserve Bank of Cleveland.
    22. repec:fip:fedhep:00025 is not listed on IDEAS

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