Borrowing to Get Ahead, and Behind

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With the expansion of lending in lower-income markets, an entirely new generation of policy implications has emerged, transcending the traditional focus on the supply of credit. Now, policymakers must also be concerned with the ability of consumers to choose from myriad different credit products, the capacity of bad apples in the credit industry to take advantage of information asymmetries and hurt both borrowers and lenders, and the need for research to assess the effect of lending on both borrowers and the businesses underwriting those loans. Yet, policymakers need to proceed cautiously with these recommendations so as to address markets with apparent problems, while preventing disruption to markets without serious problems.

Published: May 11, 2007
Source: Brookings Institution
Author: Fellowes, Matt; Mabanta, Mia

Categories: Credit Cards, Mortgage Lending