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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.

Suggested Citation

  • O. Emre Ergungor, 2006. "Bank branch presence and access to credit in low-to-moderate income neighborhoods," Working Papers (Old Series) 0616, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:0616
    DOI: 10.26509/frbc-wp-200616
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    Mortgage loans; Branch banks;

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