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Bank branch presence and access to credit in low-to-moderate income neighborhoods

  • O. Emre Ergungor

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.

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File URL: http://www.clevelandfed.org/Research/Workpaper/2006/wp0616.pdf
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Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 0616.

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Date of creation: 2006
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Handle: RePEc:fip:fedcwp:0616
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