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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.

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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:wly:jmoncb:v:42:y:2010:i:7:p:1321-1349
    DOI: 10.1111/j.1538-4616.2010.00343.x
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