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Essays On Consumer Credit Markets
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Book Synopsis Essays on Consumer Credit Markets by : Mark William Jenkins
Download or read book Essays on Consumer Credit Markets written by Mark William Jenkins and published by Stanford University. This book was released on 2009 with total page 135 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the organization of consumer credit markets using a rich and novel dataset from a large subprime auto lender. Its primary goal is to develop empirical methods for analyzing markets with asymmetric information and to use these methods to better understand the behavior of subprime borrowers and lenders. The first chapter quantifies the importance of adverse selection and moral hazard in the subprime auto loan market and shows how different loan contract terms serve to mitigate these distinct information problems. The second chapter examines the impact of centralized credit scoring on lending outcomes, including the distribution of performance across dealerships within the firm. The third chapter studies borrower repayment behavior and quantifies the impact of ex post moral hazard on interest rates and the costs of default. Collectively, the three chapters provide a better understanding of the functioning of markets for subprime credit in the U.S. They also provide unique empirical evidence on the importance of asymmetric information and the value of screening, monitoring, and contract design in consumer credit markets in general.
Book Synopsis Three essays on consumer credit history and the labor market by : Tess Forsell
Download or read book Three essays on consumer credit history and the labor market written by Tess Forsell and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Household Finance by : Alexander Calen Aberlin Kaufman
Download or read book Three Essays on Household Finance written by Alexander Calen Aberlin Kaufman and published by . This book was released on 2010 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation presents three essays on household finance. All three focus on contemporary U.S. consumer credit markets, with particular attention paid to how market organization and firm incentives mediate the way firms interact with customers and the types of contracts they offer. The first essay examines the question of whether securitization was responsible for poor underwriting standards during the recent mortgage crisis. The second essay attempts to quantify the effect of Fannie Mae and Freddie Mac's intervention in the conforming mortgage market on equilibrium outcomes such as price and contract structure. The third essay investigates how mutual ownership of a firm by its customers can limit that firm's incentive to offer contracts meant to take advantage of customers' behavioral biases.
Book Synopsis Consumer Credit and the American Economy by : Thomas A. Durkin
Download or read book Consumer Credit and the American Economy written by Thomas A. Durkin and published by . This book was released on 2014 with total page 737 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumer Credit and the American Economy examines the economics, behavioral science, sociology, history, institutions, law, and regulation of consumer credit in the United States. After discussing the origins and various kinds of consumer credit available in today's marketplace, this book reviews at some length the long run growth of consumer credit to explore the widely held belief that somehow consumer credit has risen "too fast for too long." It then turns to demand and supply with chapters discussing neoclassical theories of demand, new behavioral economics, and evidence on production costs and why consumer credit might seem expensive compared to some other kinds of credit like government finance. This discussion includes review of the economics of risk management and funding sources, as well discussion of the economic theory of why some people might be limited in their credit search, the phenomenon of credit rationing. This examination includes review of issues of risk management through mathematical methods of borrower screening known as credit scoring and financial market sources of funding for offerings of consumer credit. The book then discusses technological change in credit granting. It examines how modern automated information systems called credit reporting agencies, or more popularly "credit bureaus," reduce the costs of information acquisition and permit greater credit availability at less cost. This discussion is followed by examination of the logical offspring of technology, the ubiquitous credit card that permits consumers access to both payments and credit services worldwide virtually instantly. After a chapter on institutions that have arisen to supply credit to individuals for whom mainstream credit is often unavailable, including "payday loans" and other small dollar sources of loans, discussion turns to legal structure and the regulation of consumer credit. There are separate chapters on the theories behind the two main thrusts of federal regulation to this point, fairness for all and financial disclosure. Following these chapters, there is another on state regulation that has long focused on marketplace access and pricing. Before a final concluding chapter, another chapter focuses on two noncredit marketplace products that are closely related to credit. The first of them, debt protection including credit insurance and other forms of credit protection, is economically a complement. The second product, consumer leasing, is a substitute for credit use in many situations, especially involving acquisition of automobiles. This chapter is followed by a full review of consumer bankruptcy, what happens in the worst of cases when consumers find themselves unable to repay their loans. Because of the importance of consumer credit in consumers' financial affairs, the intended audience includes anyone interested in these issues, not only specialists who spend much of their time focused on them. For this reason, the authors have carefully avoided academic jargon and the mathematics that is the modern language of economics. It also examines the psychological, sociological, historical, and especially legal traditions that go into fully understanding what has led to the demand for consumer credit and to what the markets and institutions that provide these products have become today.
Book Synopsis Essays on Multidimensional Private Information in the Consumer Credit Market by : MeeRoo Kim
Download or read book Essays on Multidimensional Private Information in the Consumer Credit Market written by MeeRoo Kim and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This structural estimation also suggests a new way to estimate the inter-temporal elasticity of substitution that represents heterogeneous consumption smoothing motives. As well as being consistent with the results of previous chapters, the results of the structural estimation reveal a strong and positive correlation between inter-temporal elasticity of substitution and default risks.
Book Synopsis Essays on Innovation and Consumer Credit by : David Fieldhouse
Download or read book Essays on Innovation and Consumer Credit written by David Fieldhouse and published by . This book was released on 2014 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on Innovation and Consumer Credit. In Chapter 2, I examine the relationship between the number and quality of patents at both the aggregate and industry level. I find a negative relationship at the aggregate level that, surprisingly, vanishes at the industry level. I reconcile the aggregate and industry relationships by considering interactions between industries. The average correlation between the number of patents in one industry and the quality of patents in another industry turns out to be negative. I propose that the inter-industry relationship results from the outputs of each industry being complements in the production of goods. When the quality of available ideas improves in one industry, the output of that industry will increase, which leads to increased demand in the complementary industry. This increases the returns from inventing in the second industry, and results in their inventors developing ideas below the prior quality threshold. I develop a multi-industry innovation model to capture this mechanism. I also provide evidence that the inter-industry relationship strengthens with a measure of complementarities between any two industries. These findings suggest that production complementarities between industries are an important determinant of innovation, which had not been previously considered. They also contribute to the current debate on U.S. patent policy, where there is a growing belief among scholars and practitioners that the quality of patents has declined during their recent surge in number. This viewpoint largely attributes the surge in patents to their increased value in deterring competition. Instead, I use the model to demonstrate that such a decline could be explained by increased innovative opportunities in certain industries and the corresponding response of complementary industries. Chapter 3 investigates the key factors driving cyclical fluctuations in Canadian consumer insolvency filings, with a focus on the 2008-09 recession where insolvencies jumped by nearly 50%. Our analysis uses historical data at the national, provincial and city levels, as well as a micro-level analysis which makes use of filer-level data from a unique dataset of Canadian insolvency filers from 2005-11. We find that the direct effect of adverse income shocks (unemployment) accounts for roughly half the cyclical volatility of filings, while shifts in lending standards account for roughly a quarter. We also document an increase in the share of filers with middle-class characteristics during the recession - a larger fraction of filers are homeowners, live with a spouse or a partner, have student loans, earn larger incomes and are middle-aged. Furthermore, the average outstanding total debt of filers is larger during the recession, suggesting that either income shocks are hitting middle-class individuals disproportionately more, or that rolling-over large debts became more difficult due to tighter lending standards. Interestingly, fluctuations in house prices at the city level are highly correlated with insolvency rates over the business cycle, suggesting that household balance sheets also play a role in the cyclical fluctuations of filings. In chapter 4 we examine the large countercyclical fluctuations in U.S. bankruptcy filings and real credit card interest rates. In contrast to the prediction of standard consumption smoothing models, unsecured credit is pro-cyclical. To quantify the contribution of shocks to income and lending standards in accounting for the cyclical patterns in consumer credit markets, we introduce aggregate fluctuations into a heterogeneous agent life-cycle incomplete market model with a U.S. style bankruptcy regime. Aggregate fluctuations change the probability of persistent shocks to household earnings, with the likelihood of negative income shocks increasing in recessions. We find that income fluctuations and endogenous borrowing constraints alone cannot generate cyclicality of debt to income and the volatility of filings and interest rates. Incorporating countercyclical intermediate shocks to the cost of lending helps the model match both volatilities, but not the debt pro-cyclicality.
Book Synopsis Three Essays on Consumer Finance by : Manisha Padi
Download or read book Three Essays on Consumer Finance written by Manisha Padi and published by . This book was released on 2017 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on consumer financial contracts. Particularly, this thesis focuses on the regulation and design of markets for financial contracts, and their impact on household financial health. The first chapter studies the role of consumer protection law in the function of mortgage markets in the United States. Consumer protection laws are intended to improve consumer outcomes and are becoming more common, particularly in mortgage markets after the 2008 recession. Little empirical evidence exists about the benefits of these laws to consumer outcomes, relative to the potential compliance costs. This chapter studies the effect of two common types of consumer protection laws: seller standards of conduct, enforced through ex post lawsuits by prosecutors and consumers, and mandated disclosures, which require sellers to provide consumers with information to help them make better decisions. Using a natural experiment in Ohio, which introduced the Homebuyer's Protection Act in 2007, 1 study the impact of both seller standards of conduct and mandated disclosures on the performance of loans owned by Fannie Mae or Freddie Mac between 2002 and 2012. I find that imposing standards of conduct on lenders increases borrower defaults in the short term, and is correlated with a drop in foreclosures and fewer mortgage originations. Mandated disclosures decrease mortgage defaults in the short term, and the effect is correlated with smaller transactions, lower interest rates, and higher borrower credit scores. I introduce a simple model of strategic default showing that standards of conduct targeting lenders can provide incentives to lenders to be lenient towards all borrowers, increase borrower default, while mandated disclosure can induce behaviorally biased consumers to default less often. Taken together, the evidence suggests that seller standards of conduct result in lender lenience towards borrowers but operate by shifting the cost of dropping house prices from borrowers onto lenders. On the other hand, carefully designed disclosures can encourage consumers to be more responsible in repayment of loans and can decrease the overall impact of unexpected drops in house prices. The second chapter studies the impact of defined benefit pensions on retirees' consumption patterns. It is authored jointly with Professor Jerry Hausman. Retirees discontinuously decrease their consumption spending upon retirement, a phenomenon described as the retirement consumption puzzle. This chapter studies the impact of defined benefit pensions on the retirement consumption puzzle. Data from the Health and Retirement Survey shows that households with defined benefit pensions experience a significantly smaller drop in consumption spending at retirement. The difference in consumption patterns between households with defined benefit and defined contribution pensions is consistent with a drop in price of home production after retirement. Defined benefit pensions allow households to exert less effort in home production, as well as decreasing the need for precautionary savings, meaning their value is understated if home production is not accounted for. Using HRS data, we estimate the utility value of defined benefit pensions, incorporating both home production and precautionary savings. The results imply that current methods of valuing retirement income products, such as employer provided pensions and private annuities, are biased downward. The third chapter studies the purchase of annuities by retirees in Chile's privatized social security system. It is authored jointly with Gaston Illanes, of Northwestern University Department of Economics. Chile has one of the highest voluntary annuitization rates in the world, with more than 60% of retirees purchasing a private annuity. In contrast, less than 5% of US retirees purchase annuities, despite theoretical predictions that annuity value is high. Annuities in Chile are sold through a unique government-run exchange which decrease search costs and intensifies competition without imposing costs on firms. Chile also has a privatized social security system in which retirees that do not buy an annuity must take a "programmed withdrawal" of their mandated retirement savings that exposes them to more stock market risk than Social Security would. Using novel individual level administrative data and theoretical calibrations, we provide evidence that the high annuitization rate is driven by Chile's unique regulatory regime, rather than by the risk of programmed withdrawal in a privatized system. We document several features of the annuity exchange in Chile. First, annuity prices are low compared to the worldwide average. Second, annuity providers have significant market power. Third, selection exists in the market, both into purchase of annuities, and into searching for better prices. Based on these facts, we calibrate a insurance value of full annuitization compared to the privatized alternative offered by the Chilean government and compare to the value of full annuitization compared to public Social Security, such as that found in the US. The calibration suggests that privatization of social security alone cannot explain the high level of annuitization in Chile. Regulations limiting search costs can cause low prices, lower levels of adverse selection, and high brand preferences that together can explain the high annuitization rate.
Book Synopsis Essays on Household Finance and Credit Market Regulation by : Scott Thomas Nelson
Download or read book Essays on Household Finance and Credit Market Regulation written by Scott Thomas Nelson and published by . This book was released on 2018 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on household finance and regulatory policy in consumer credit markets. The first chapter studies the efficiency and distributional effects of credit card pricing restrictions in the 2009 Credit CARD Act. I document how two forces drive these restrictions' effects: first, the Act constrains lenders from adjusting interest rates in response to new information about default risk, which exacerbates adverse retention of risky borrowers and induces partial market unraveling on new accounts; second, the Act constrains lenders from pricing private information about demand, which reduces markups on inelastic borrowers. I develop a structural model of the US credit card market to study how heightened information problems and lower markups interact in equilibrium to determine the Act's effects. I find that equilibrium market unraveling is most severe for subprime consumers, but the reduction in markups is substantial throughout the market, so that on net, the Act's restrictions allow consumers of all credit scores to capture higher surplus on average. Total surplus inclusive of firm profits rises among prime consumers, whereas gains in subprime consumer surplus are greatest among borrowers who were recently prime. The second chapter (co-authored with Alexander Bartik) also studies the regulation of credit market information, focusing on the use of such information in labor markets. In particular we study recent bans on employers' use of credit reports to screen job applicants. This practice has been popular among employers but controversial for its perceived disparate impact on racial minorities. Exploiting geographic, temporal, and job-level variation in which workers are covered by these bans, we analyze these bans' effects in two datasets: the panel dimension of the Current Population Survey (CPS); and data aggregated from state unemployment insurance records. We find that the bans reduced job-finding rates for blacks by 7 to 16 percent, and increased subsequent separation rates for black new hires by 3 percentage points. Results for Hispanics and whites are less conclusive. We interpret these findings in a statistical discrimination model in which credit report data, more for blacks than for other groups, send a high-precision signal relative to the precision of employers' priors. The third chapter (co-authored with Sydnee Caldwell and Daniel Waldinger) returns to consumer credit markets and studies determinants of household borrowing behavior. Many economic models predict that consumption and borrowing decisions today depend on beliefs about risky future income. We quantify one contributor to income uncertainty and study its effects: uncertainty about annual tax refunds. In a low-income sample for whom tax refunds can be a substantial portion of income, we collect novel survey evidence on tax filers' expectations of and uncertainty about their tax refunds; we then link these data with administrative tax data, a panel of credit reports, and survey-based consumption measures. We find that while many households have correct mean expectations about their refunds, there is substantial, and accurately reported, subjective uncertainty. Households borrow moderate amounts out of expected tax refunds: for each dollar of expected refund, roughly 15 cents in revolving debt is repaid after refund receipt. This borrowing and repayment is less pronounced for more uncertain households, consistent with precautionary behavior. The unexpected component of tax refunds is not used to pay down debt, but rather induces higher debt levels. Credit report and survey evidence both suggest that these higher debt levels are driven by newly financed durable purchases such as vehicles.
Book Synopsis Essays on Asymmetric Information in Health Care and Consumer Credit Card Lending Markets by : Jia Xiang
Download or read book Essays on Asymmetric Information in Health Care and Consumer Credit Card Lending Markets written by Jia Xiang and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I empirically investigate the welfare consequences of asymmetric information in the context of physician-patient interaction in medical treatment decisions and consumers' adverse selection in credit card lending. In chapter 1, with health insurance claims data for a large district in China, I empirically show that physicians respond to their financial incentives, using their informational advantage to influence patients' treatment choices. Difference-in-Differences analysis shows that, for a diagnosis for which surgical treatment is somewhat discretionary, surgery were chosen nearly three times as often after an increase in physicians' remuneration differential between surgical and non-surgical treatment, with no change in health outcomes. The effect was 1.5 times larger for more insured patients. Chapter 2 first characterizes the physician-patient interaction formally using a Bayesian persuasion framework and test the model's main implications. I then estimate a parameterized version of the model to calculate the value of fully informing patients about the relative value of treatment options. Over half of the surgery patients would not have done so were they fully informed, whereby total welfare rises by 89 percent. In chapter 3, by analyzing unique data from a randomized balance transfer market experiment in the U.S., I show that conditional on price, higher risk types are more willing to take up an offer.The annual welfare loss due to adverse selection is estimated to be at least $12 per U.S. credit cardholder. In addition, the FICO score captures 90 percent of the welfare loss due to adverse selection.
Book Synopsis The Impact of Public Policy on Consumer Credit by : Thomas A. Durkin
Download or read book The Impact of Public Policy on Consumer Credit written by Thomas A. Durkin and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt: As both the twenty-first century and the new millennium opened and the old eras passed into history, individuals and organizations throughout the world advanced their listings of the most significant people and events in their respective specialties. Possibly more important, the tum of the clock and calendar also offered these same observers a good reason to glance into the crystal ball. Presumably, the past is of greatest interest to most people when it permits better understanding of the present, and maybe even limited insight into the outlook. In keeping with the reflective mood of the time, the staff and friends of the Credit Research Center (CRC) at Georgetown University's McDonough School of Business noted that the beginning of the new millennium also marked the beginning of the second quarter-century of the Center's existence. The Center began at the Krannert Graduate School of Management at Purdue University in 1974 and moved to the McDonough School of Business at Georgetown University in 1997. The silver anniversary of its founding offered the occasion for creating more than another listing of significant past accomplishments and milestones. Rather, it offered the opportunity and, indeed, a mandate for CRC as an academic research center, to undertake a retrospective and future look into the status of research questions pertaining to consumer credit markets. For this reason, the Center organized a research conference which was held in Washington, D. C.
Book Synopsis Essays on Information and Beliefs in Credit Markets by : Matthew Botsch
Download or read book Essays on Information and Beliefs in Credit Markets written by Matthew Botsch and published by . This book was released on 2014 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is a collection of three essays in financial economics, specifically focused on the role of information and beliefs in credit markets. The first chapter establishes that private bank information about customers in primary lending markets exists. The second chapter shows that private information hinders banks' capacities to sell loans on secondary markets, unless the purchaser believes that the bank has committed to remain uninformed. The third chapter explores the welfare consequences of incorrect borrower beliefs about the economic environment on financial product choice. In the first chapter, my co-author and I hypothesize that while lending to a firm, a bank receives signals that allow it to learn and better understand the firm's fundamentals; and that this learning is private; that is, it is information that is not fully reflected in publicly-observable variables. We test this hypothesis using data from the syndicated loan market between 1987 and 2003. We construct a variable that proxies for firm quality and is unobservable by the bank, so it cannot be priced when the firm enters our sample. We show that the loading on this factor in the pricing equation increases with relationship time, hinting that banks are able to learn about firm quality when they are in an established relationship with the firm. In the second chapter, I present new evidence that lemon problems hinder trade on secondary mortgage markets. Using the geographic distance from lenders to borrowers as a proxy for the absence of private bank information, I document a systematic positive link between distance and the mortgage sale rate. Mortgage sale rates are higher when the originating lender is less likely to be informed about the borrower. I further show that the private mortgage sale rate locally depends on lender-borrower distance only above the conforming loan limit, in the illiquid jumbo market where the GSEs are barred from purchasing mortgages. This is consistent with the familiar tradeoff between market liquidity and seller incentives to acquire information. In the third chapter, I investigate how borrowers' incorrect beliefs about future inflation might bias their choice between fixed-rate and adjustable-rate mortgages. Borrowers who have experienced recent periods of greater inflation pay more for fixed-rate mortgage contracts and pay more in interest, at least over the first six yeras of the mortgage's life. That is, incorrect beliefs about future inflation are welfare-reducing both ex ante and ex post.
Book Synopsis The Economics of Consumer Credit by : Giuseppe Bertola
Download or read book The Economics of Consumer Credit written by Giuseppe Bertola and published by MIT Press. This book was released on 2006 with total page 389 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cross-national analysis of empirical, theoretical, and policy issues in the consumer credit industry, including household debt, credit card usage, and bankruptcy.
Book Synopsis Consumer Credit, Debt and Bankruptcy by : Johanna Niemi
Download or read book Consumer Credit, Debt and Bankruptcy written by Johanna Niemi and published by Bloomsbury Publishing. This book was released on 2009-07-15 with total page 462 pages. Available in PDF, EPUB and Kindle. Book excerpt: After a long period of prosperity and steady economic growth, the world's leading economies are now in crisis, and although there will be debate about its origins, the scale and seriousness of the crisis is in no doubt. There is also no doubt that excessive amounts of consumer credit, allied to a weak understanding of how globalised credit markets might react to a crisis, have played a significant part. This book, which is primarily about credit, debt and the trouble they have led to, is written by authors who have specialised in researching into over-indebtedness, that is, situations in which an individual's debt burden has become overwhelming. For these authors the plight of individuals is a primary concern, but the wider issue is how credit is used and how it changes societies. The essays in this volume, addressing topics which are fundamental to our understanding of the current crisis, range widely across the whole sector of consumer finance, including mortgages, 'credit-binges', the regulation of consumer lending, insolvency, repayment plans, debt counselling and much more besides. The conclusions drawn from the book are equally wide-ranging, but above all the lesson learned from these essays is that the financialisation of contemporary life ensures that issues of the appropriate role of credit remain of critical importance in society.
Book Synopsis Essays on Consumer Finance by : Kathryn Fritzdixon
Download or read book Essays on Consumer Finance written by Kathryn Fritzdixon and published by . This book was released on 2015 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Moving Forward by : Nicolas P. Retsinas
Download or read book Moving Forward written by Nicolas P. Retsinas and published by Brookings Institution Press. This book was released on 2011-01-01 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt: A Brookings Institution Press and Harvard University Joint Center for Housing Studies publication The recent collapse of the mortgage market revealed fractures in the credit market that have deep roots in the system's structure, conduct, and regulation. The time has come for a clear-eyed assessment of what happened and how the system should be strengthened and restructured. Such reform will have a profound and lasting impact on the capacity of Americans to use credit to build assets and finance consumption. Moving Forward explores what caused the crisis and, more important, focuses on the path ahead. The challenge remains the same as ever: protect consumers, ensure fairness, and guarantee soundness of the financial system without stifling innovation and overly restricting access to credit and consumer choice. Nicolas Retsinas, Eric Belsky, and their colleagues aim to stimulate debate based on analysis of the opportunities and challenges presented by the various components of global capital markets: financial engineering, risk assessment and management, specialization of financial intermediation, and marketing methods. The contributors—leaders in business, government, academia, and the nonprofit sector—discuss new research and ideas about the future of credit markets, including how improvements might be shaped by industry leaders. Contributors: John Y. Campbell, Harvard University; Marsha J. Courchane, Charles River Associates; Ren Essene, Federal Reserve Board; Allen Fishbein, Federal Reserve Board; Howell E. Jackson, Harvard Law School; Melissa Koide, Center for Financial Services Innovation; Michael Lea, San Diego State University; Eugene Ludwig, Promontory Financial Group; Brigitte C. Madrian, Harvard Kennedy School; Nela Richardson, Joint Center for Housing Studies of Harvard University; Rachel Schneider, Center for Financial Services Innovation; Peter Tufano, Harvard Business School; Peter M. Zorn, Freddie Mac
Book Synopsis Consumer Credit in the United States by : D. Marron
Download or read book Consumer Credit in the United States written by D. Marron and published by Springer. This book was released on 2009-11-23 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is commonly imagined that in recent years the rampant growth of consumer credit has lured American consumers into a crippling state of indebtedness, a state that has upended old cultural values of Puritan thrift and stimulated a frenzy of consumption. Drawing on the sociological concept of government and informed by a historical perspective, Marron presents a much more complex and nuanced reality. From its early antecedents in nineteenth century salary lending and instalment selling, she shows how the emergence and growth of consumer credit in the United States have always been subject to shifting regimes of control and regulation.
Book Synopsis Essays on Consumer Portfolio and Credit Risk by : Tingting Ji
Download or read book Essays on Consumer Portfolio and Credit Risk written by Tingting Ji and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Three essays comprise this dissertation. The first essay uses panel data to show that labor income risk alone cannot explain limited stock market participation. However, transaction costs and household demographics, considered jointly, can determine both the discrete choice of whether to hold stock and the amount held, conditional on whether the household is already investing in the stock market. Transaction costs are proxied by state-level number of brokers per capita. The second essay builds on the first essay. I measure two different covariance terms. One is between self-evaluated house value and uninsurable labor income risk. The other is between housing investment return and stock return. The results show that homeownership has a diversification effect on stock holdings. This effect occurs because adding a house to the household portfolio can significantly decrease the overall risk of the portfolio. The last essay empirically shows that unemployment is significant in determining both consumer bankruptcy filings and delinquency even after controlling for household demographics. Furthermore, I show that unemployment and the debt/wealth ratio also affect the choice of whether to file for bankruptcy under chapter 7 or chapter 13, after controlling for demographics. The paper then points out some of the implications the empirical results have for policy-makers and banking regulators.
