Preprint
The Role of Regulation and Competition in Credit Allocation: Evidence from Small Business Lending
Social Science Research Network : SSRN
2021
Abstract
Do policies that promote credit access have an impact on targeted borrowers? To address this question, we develop a theoretical model of information production, regulation and bank competition and test its predictions using the Community Reinvestment Act's small businesses lending program. The analysis reveals that, on average, regulation-induced surge of loans leads to an improvement in the credit score of small businesses. However, the effect vanishes in markets with high demand-adjusted bank competition, due to weaker bank incentives for information production. In order to improve credit allocation across all local markets, interventions should also enact policies that lower information costs
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Details
- Title
- The Role of Regulation and Competition in Credit Allocation
- Creators
- Panagiotis AvramidisKonstantinos SerfesKejia Wu
- Publication Details
- Social Science Research Network : SSRN
- Publisher
- SSRN
- Number of pages
- 39 pages
- Resource Type
- Preprint
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Other Identifier
- 991021867160404721