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dc.contributor.authorDick, Astriden_US
dc.contributor.authorLehnert, Andreasen_US
dc.date.accessioned2012-08-17T14:24:55Z-
dc.date.available2012-08-17T14:24:55Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/60538-
dc.description.abstractThe effect of credit market competition on borrower default is theoretically ambiguous, because the quantity of credit supplied may rise or fall following an increase in competition. We investigate empirically the relationship between credit market competition, lending to households, and personal bankruptcy rates in the United States. We exploit the exogenous variation in market contestability brought on by banking deregulation at the state level: after deregulation, banks faced the threat of entry into their state markets. We find that deregulation increased competition for borrowers, prompting banks to adopt more sophisticated credit rating technology. In turn, these developments led previously excluded households to enter the credit market. We document that, following deregulation, (1) overall lending increased, (2) loss rates on loans decreased, and (3) bankruptcy rates rose. Further, we find that lending and bankruptcy rates increased more in states with greater actual (rather than potential) entry, and that credit card productivity increased after the removal of entry restrictions. These findings suggest that entrants brought with them enhanced underwriting technology that allowed for credit extension to new borrowers.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of New York New York, NYen_US
dc.relation.ispartofseriesStaff Report, Federal Reserve Bank of New York 272en_US
dc.subject.jelK3en_US
dc.subject.jelG2en_US
dc.subject.jelL1en_US
dc.subject.ddc330en_US
dc.subject.keywordconsumer bankruptcy, banks, competitionen_US
dc.subject.stwPrivate Verschuldungen_US
dc.subject.stwInsolvenzen_US
dc.subject.stwKreditmarkten_US
dc.subject.stwWettbewerben_US
dc.subject.stwUSAen_US
dc.titlePersonal bankruptcy and credit market competitionen_US
dc.typeWorking Paperen_US
dc.identifier.ppn522102395en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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