For the supply side of the market, the opposite should have been true. The same income trends that translated into more demand for credit should have resulted in less supply. Greater income inequality and slower income growth meant less collateral for banks. Also, slower income growth and rising inequality occurred at a time of financial deregulation, which has a priori an ambiguous effect on the supply of credit. There may be more banks entering the market, which could raise the credit supply, but there is also more consolidation in the industry, which could reduce the credit supply, at least for low-income and moderate-income borrowers.
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