Exclusion, competition, and regulation in the retail loan market

B-Tier
Journal: Journal of Banking & Finance
Year: 2015
Volume: 52
Issue: C
Pages: 189-198

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Exclusion of borrowers from credit markets became a primary concern for regulators during the recovery from the recent recession. The paper analyzes loan-making institutions that set both interest rates and minimum credit requirements. We propose analytical measures of the degree of borrower exclusion from receiving loans. We analyze five market structures: Single lender, regulated interest rate, entry, interest rate discrimination, and highly-competitive lenders. Interest rate regulation improves total welfare relative to a single lender market. However, entry of a second lender reduces exclusion and generates higher total welfare. In the absence of fixed costs, perfect and Bertrand competition are optimal.

Technical Details

RePEc Handle
repec:eee:jbfina:v:52:y:2015:i:c:p:189-198
Journal Field
Finance
Author Count
2
Added to Database
2026-01-26