In this paper we investigate the history of negotiable instruments and the holder in due course rule and contrast their function and consequences in the 1700s with their function and consequences today. We explain how the holder in due course rule works and identify ways in which the rule’s...

Relationship lending theory suggests that lenders in close proximity to their borrowers might be the most efficient providers of screening and monitoring services, because the cost of collecting information declines with distance. The author presents evidence that ties bank branch presence to...

This paper shows that mortgage lenders with a physical branch near the property being financed have better information about home-price fundamentals than nonlocal lenders. During the real estate run-up from 2002-06, home price growth negatively correlates with the share of loans made by local...

Banks specialize in lending to informationally opaque borrowers by collecting soft information about them. Some researchers claim that this process requires a physical presence in the market to lower information collection costs. The author provides evidence in support of this argument in the...

This paper examines the impact of interest-rate and down-payment subsidies on default rates and losses given default, and finds that down-payment subsidies create successful homeowners at a lower cost than interest-rate subsidies.

A discussion of how mortgage lenders might use posted lending terms to signal both their eagerness to take new loan applications and their lending standards.

A lender-specific analysis of differences in minority and low-income mortgage loan originations using new applicant-level data gathered under the Home Mortgage Disclosure Act of 1975.

A documentation of racial and neighborhood differences in home mortgage denial rates using data collected under the Home Mortgage Disclosure Act, exploring the extent to which objective lending criteria are responsible for observed differences. The authors find persistent variations in denial...