Bank Branch Presence and Access to Credit in Low‐ to Moderate‐Income Neighborhoods

Ozgur Emre Ergungor

Journal of Money, Credit and Banking, 2010, vol. 42, issue 7, 1321-1349

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.

Date: 2010
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https://doi.org/10.1111/j.1538-4616.2010.00343.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:42:y:2010:i:7:p:1321-1349

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