1,721,102 research outputs found
Where is the missing credit card debt? Clues and implications
Full text linkJonathan Zinman, an assistant professor of economics at Dartmouth College and a visiting scholar with the Payment Cards Center, makes a casual comparison of industry and household data sets which suggests that households underreport credit card borrowing by a factor of three. This paper offers some reassurance and several new stylized facts. Accounting for differences in definitions between household and industry measures reduces debt underreporting to a factor of two. Underreporting is less severe for general-purpose than for other cards. The true underreporting factor has remained stable over the past 15 years, even as 26 million households entered the market. Households report charges and account holding relatively accurately.Credit cards ; Debt
Restricting consumer credit access: household survey evidence on effects around the Oregon rate cap
Full text linkMany policymakers and some behavioral models hold that restricting access to expensive credit helps consumers by preventing overborrowing. The author examines some short-run effects of restricting access, using household panel survey data on payday loan users collected around the imposition of binding restrictions on payday loan terms in Oregon. The results suggest that borrowing fell in Oregon relative to Washington, with former payday loan users shifting partially into plausibly inferior substitutes. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of the Oregon households. The results suggest that restricting access to expensive credit harms consumers on average.Consumer credit
Debit or credit?
No full textConsumers make millions of payments at retail establishments, also known as point of sale or POS transactions. Fifty years ago consumers had only two POS payment options—cash or check. Now they have many choices: credit card, check, cash, store-issued charge card, stored-value card, debit card, or EFT. How do they decide which payment method to use? Is cost a major factor? What about demographic characteristics? Does the dollar value of the transaction determine the selection? What has caused consumers to switch from checks to electronic payments? How are incentives (e.g., miles) influencing payment behavior? Are these incentives distorting payment behavior in a way that is costly for the retailer? Jonathan Zinman will open this session with a brief overview of his paper “Debit or Credit?”Payment systems
Limited and varying consumer attention: evidence from shocks to the salience of bank overdraft fees
Full text linkThe authors explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey month. Taking multiple overdraft surveys builds a "stock" of attention that reduces overdrafts for up to two years. The effects are significant among consumers with lower education and financial literacy. Consumers avoid overdrafts not by increasing balances but by making fewer debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.Overdrafts ; Consumer behavior
In harm’s way? Payday loan access and military personnel performance
Full text linkDoes borrowing at 400 percent APR do more harm than good? The Pentagon asserts that payday loans harm military readiness and successfully lobbied for a binding 36 percent APR cap on loans to military members and their families (effective October 1, 2007). But existing evidence on how access to high-interest debt affects borrower behavior is inconclusive. We use within-state variation in state lending laws and exogenous variation in the assignment of Air Force personnel to bases in different states to estimate the effect of payday loan access on personnel outcomes. We find significant average declines in overall job performance and retention and significant increases in severely poor readiness. These results provide some ammunition for the private optimality of the Pentagon’s position. The welfare implications for military members are less clear-cut, but our results are consistent with the interpretation that payday loan access causes financial distress and severe misbehavior for relatively young, inexperienced, and financially unsophisticated airmen. Overall job performance declines are also concentrated in these groups, and several pieces of evidence suggest that these declines are welfare-reducing (and not the result of airmen optimally reducing effort given an expanded opportunity set); e.g., performance declines are larger in high unemployment areas with payday lending.Loans
List Randomization for Sensitive Behavior: An Application for Measuring Use of Loan Proceeds
Full text linkPolicymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in nonresearch settings these claims are assessed using readily available but unverified self-reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.
Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila
Full text linkMicrocredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.microfinance, microcredit, microentreprenuership, risk sharing, formal and informal finance
Replication Data for: Dangers of a double-bottom line: A poverty targeting experiment misses both targets
No full textThese data and code reproduce the analysis in "Dangers of a double-bottom line: A poverty targeting experiment misses both targets", by Dean Karlan, Adam Osman & Jonathan Zinman, Journal of Economics & Management and Strategy, forthcoming (2021
- …
