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Working Paper

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

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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.
12.01.2006ISSN 2573-7953 WP 06-16DOI 10.26509/frbc-wp-200616
Keywords access to credit, branch proximity

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Ergungor, O. Emre. 2006. “Bank Branch Presence and Access to Credit in Low-to-Moderate Income Neighborhoods.” Federal Reserve Bank of Cleveland, Working Paper No. 06-16. https://doi.org/10.26509/frbc-wp-200616