E-Commerce

Local Scale Economies In Loan Sales And Access To Mortgage Credit: 1994-2008

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Executive Summary

While secondary loan markets have provided lenders with substantial liquidity, evidence of the impact of those markets on borrower access to credit is limited. In part, that is because it is difficult to separate out variation in access to secondary markets from other factors that determine lending outcomes. The authors address this issue by drawing on spatial variation in secondary market activity. They also shed new light on the importance of proximity between borrowers and lenders for credit market outcomes. Central to the analysis is the idea that locally active secondary markets deepen networks that enhance lender access to information and reduce the transactions cost of selling loans.

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