The views expressed are the author's and do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System. Abstract The Home Mortgage Disclosure Act of 1975 (HMDA) was designed to further the goal of fair access to mortgage credit and requires lenders to report information including the location, loan amount, income, and the race/ethnicity and sex of the...

The literature on microfinance has largely attributed the industry’s success to joint liability and peer monitoring, which are direct results of the group lending methodology. As individual lending has become more common in microfinance, especially in Latin America, we need to revisit the reasons for these successes. This paper uses a dynamic model with endogenously determined repayment incenti...

This paper explores how bank characteristics and the institutional environment influence the composition of banks’ loan portfolios. Using a new data set based on the recent EBRD Banking Environment and Performance Survey (BEPS), which was conducted in 2005 for 220 banks in 20 transition countries, we show that bank characteristics such as ownership and size are important determinants of bank cu...

for banks and financial institutions, credit risk had been an essential factor that needed to be managed well. credit risk was the possibility that a borrower of counter party would fail to meet its obligations in accordance with agreed terms. credit risk; therefore arise from the bank’s dealings with or lending to corporate, individuals, and other banks or financial institutions.  credit risk...

*The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. 1 Most observers view the expansion of high-risk mortgage loans between 2004 and 2006 as a particularly dramatic example of a widespread decline in lending standards. While the research on this episode is expanding rapidly, the e...

The paper by Heider and Hoerova (2009) is ambitious. It studies the interaction between secured interbank lending, unsecured interbank lending, and banks’ portfolio choices. It is motivated by a puzzling empirical observation, namely the “decoupling of secured and unsecured lending rates” in the Great Financial Crisis of 2007–09. The observation made by Heider and Hoerova is that on August 9, 2...

We study the adoption of automated credit scoring at a large auto finance company and the changes it enabled in lending practices. Credit scoring appears to have increased profits by roughly a thousand dollars per loan. We identify two distinct benefits of risk classification: the ability to screen high-risk borrowers and the ability to target more generous loans to lower-risk borrowers. We sho...

This paper examines the role of credit market competition in the dynamic of capital accumulation. It is shown that the lending relationship problem which seems to characterize competitive credit markets can have negative repercussions for capital accumulation. In contrast, monopoly power in banking can be bene cial for growth. A monopolist bank may lower the equilibrium quantity of credit, but ...

Section 2227 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 requires the Board of Governors of the Federal Reserve System to conduct a study and submit a report every five years to Congress detailing the extent of small business lending by all creditors. The act specifies that the study should identify factors that provide policymakers with insight into the small business...