This paper examines what we can learn from existing studies, or could learn from existing data, about the implications of banking consolidation for the financing of economic activity in rural areas. The evidence indicates that large organizations will expand their offices in rural areas. The role of relatively small banks headquartered in rural areas as providers of banking services in their co...

The main purpose of this paper is to present the empirical findings derived from the data of small firms that the availability of private and public information on the borrowing firm leads to diverse borrowing patterns among firms. Exploring logit models to characterize the firm’s choice of a financial source, we find that firms whose information is poorly recorded, or who are publicly less rec...

This paper analyzes the relation between the quality of the legal enforcement of loan contracts and the allocation of credit to households, both theoretically and empirically. We use a model of household credit market with secured debt contracts, where the judicial system affects the cost incurred by banks to actually repossess the collateral. The model shows that the working of the judicial sy...

We examine the role of borrower concerns about future credit availability in mitigating the effects of adverse selection and income misrepresentation in the mortgage market. We show that the majority of additional risk associated with “low-doc” mortgages originated prior to the Great Recession was due to adverse selection on the part of borrowers who could verify income, but chose not to. We pr...

We investigate whether information sharing among banks has affected credit market performance in the transition countries of Eastern Europe and the former Soviet Union, using a large sample of firm-level data. Our estimates show that information sharing is associated with improved availability and lower cost of credit to firms. This correlation is stronger for opaque firms than transparent firm...

In his opening remarks at the conference, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, noted that innovation in electronic payments has led to major changes in the financial industry. The process of innovation has allowed new entrants into the industry, expanding the availability of consumer credit and permitting more opportunities for smoothing consumption over time....

Conventional measures of banking sector The traditional indicators utilized for assessing the size, depth and development of a country’s banking (financial) sector are: • The ratio of M2 to GDP • The ratio of private credit to GDP. In particular, both these measures have been used to show the causal effects of financial development on economic growth. However, both measures have some limitation...

Credit scoring models are normally built using only applicants who have been previously accepted for credit. Such non-random sample selection may produce bias in estimated model parameters and accordingly model predictions of repayment performance may not be optimal. Previous empirical research suggests that omission of rejected applicants has a detrimental impact on model estimation and predic...