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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 Paper 0616, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:0616
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    Cited by:

    1. 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.
    2. Kristin Turney & Daniel Schneider, 2016. "Incarceration and Household Asset Ownership," Demography, Springer;Population Association of America (PAA), vol. 53(6), pages 2075-2103, December.
    3. M. Dietsch & C. Welter-Nicol, 2014. "Do LTV and DSTI caps make banks more resilient?," Débats économiques et financiers 13, Banque de France.
    4. Jason Allen & Kiana Basiri, 2016. "The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit," Staff Working Papers 16-26, Bank of Canada.
    5. O. Emre Ergungor, 2009. "Foreclosures in Ohio: does lender type matter?," Proceedings, Federal Reserve Bank of San Francisco, issue Jan.
    6. 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.
    7. 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.
    8. 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.
    9. repec:fip:fedhep:00025 is not listed on IDEAS
    10. 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.
    11. 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.
    12. Alimukhamedova, Nargiza & Hanousek, Jan, 2015. "What Do We Know about Microfinance at Macro Glance?," CEPR Discussion Papers 10484, C.E.P.R. Discussion Papers.
    13. repec:eee:finsta:v:33:y:2017:i:c:p:1-22 is not listed on IDEAS
    14. repec:eee:jfinec:v:125:y:2017:i:1:p:182-199 is not listed on IDEAS
    15. 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.
    16. Ergungor, O. Emre & Moulton, Stephanie, 2011. "Do bank branches matter anymore?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    17. 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.
    18. 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.
    19. 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.
    20. Kristle Romero Cortés, 2012. "Did local lenders forecast the bust? Evidence from the real estate market," Working Paper 1226, Federal Reserve Bank of Cleveland.

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    Keywords

    Mortgage loans ; Branch banks;

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