Banking market concentration and consumer credit constraints: Evidence from the Survey of Consumer Finances
نویسنده
چکیده
Consumer borrowing is a large and growing part of the American financial landscape, amounting to over $1.5 trillion in 2000, or 15 percent of GDP. This credit helps households improve the timing of consumption expenditure, allowing consumers to purchase goods and services when they are needed. Still, many households report being credit constrained, with requests for credit rejected or discouraged by potential lenders. Stiglitz and Weiss (1981) formalize models where credit is rationed in equilibrium, and Petersen and Rajan (1995) extend this model to banking markets with varying degrees of local competition. Local banking market competition can be thought of as one element of the more general set of factors influencing the ‘captivity’ of a bank’s consumer borrowers. This paper uses data from the 1983 Survey of Consumer Finances to empirically test the relationship between banking market concentration and households’ self-reported measures of credit rationing and constraint. There is strong evidence that more concentrated markets have fewer constrained borrowers, a result consistent with the Petersen-Rajan model of credit markets. Interest rates on consumer borrowing appear to decrease more sharply with age in competitive markets than in concentrated markets. This result is consistent with the cross-subsidization between new and existing borrowers that is central to the Petersen-Rajan model.
منابع مشابه
Banking market concentration and consumer credit constraints: Evidence from the 1983 Survey of Consumer Finances
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تاریخ انتشار 2008