Culture, Lending Relationships, and the Cost of Credit
Author:
Albareto Giorgio1,
Galardo Maddalena1,
Mistrulli Paolo Emilio1,
Sorvillo Bianca1
Affiliation:
1. Banca d’Italia , Italy
Abstract
Abstract
We provide evidence on how cultural differences affect loan pricing by using a unique data set from the Italian Credit Register. We show that immigrants pay more for credit compared with natives and that this difference is smaller for immigrants who have Italian parents and for those belonging to the Christian religion. Furthermore, we find that the gap between immigrants and natives narrows as the amount of information shared among lenders through the credit register increases. This suggests that most of the higher cost of credit paid by immigrants is due to statistical discrimination rather than taste-based discrimination. (JEL G21, J15, J71)
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics,Finance,Business and International Management
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