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Working Paper

Foreclosures: Relationship Lending in the Consumer Market and its Aftermath

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Relationship lending theory suggests that lenders in close proximity to their borrowers might be the most efficient providers of screening and monitoring services, because the cost of collecting information declines with distance. The author presents evidence that ties bank branch presence to borrower performance in the low-income housing market, which provides support for this theory.
12.01.2006ISSN 2573-7953 WP 06-17DOI 10.26509/frbc-wp-200617
Keywords relationship lending, foreclosure, 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. “Foreclosures: Relationship Lending in the Consumer Market and its Aftermath.” Federal Reserve Bank of Cleveland, Working Paper No. 06-17. https://doi.org/10.26509/frbc-wp-200617