Konferenzbeitrag
Tighter Credit and Consumer Bankruptcy Insurance
How does bankruptcy affect the dynamics of aggregate consumption? We quantify the trade-off between the insurance and creditworthiness effects of bankruptcy in response to tighter credit. We show that bankruptcy dampens the effect of tighter credit on aggregate consumption on impact because it allows borrowers to sustain consumption, but statutory exclusion from the credit market reduces consumption smoothing over time and slows the recovery. Default costs play a crucial role in bankruptcy decisions and also shape consumption dynamics. We find that the 2005 BAPCPA reform, by making bankruptcy more costly, worsened the negative welfare effects of the subsequent credit tightening.
- Language
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Englisch
- Bibliographic citation
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Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics
- Classification
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Wirtschaft
- Subject
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Financial Shocks
Aggregate Consumption Dynamics
Chapter 7
BAPCPA,Bank-Intermediated Credit
Transitional Dynamics
- Event
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Geistige Schöpfung
- (who)
-
Mendicino, Caterina
Cavalcanti, Tiago
Antunes, Antonio
Peruffo, Marcel
Villamil, Anne
- Event
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Veröffentlichung
- (who)
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ZBW - Leibniz Information Centre for Economics
- (where)
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Kiel, Hamburg
- (when)
-
2021
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Konferenzbeitrag
Associated
- Mendicino, Caterina
- Cavalcanti, Tiago
- Antunes, Antonio
- Peruffo, Marcel
- Villamil, Anne
- ZBW - Leibniz Information Centre for Economics
Time of origin
- 2021
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CONSUMER'S SATISFACTION - EXPLANATORY MODELS
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CONSUMER'S SATISFACTION - EXPLANATORY MODELS
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Commitment and Borrower Heterogeneity: Evidence from Revolving Consumer Credit
Income redistribution, consumer credit, and keeping up with the Riches
Personal bankruptcy and wage garnishment
Knowing What Not To Do: Financial Literacy and Consumer Credit Choices
Becoming obsolete: Bankruptcy through technological progress
Bankruptcy law, bonded labor and inequality
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Products Generated Knowledge (Intangible Assets) Determinants in Predicting the Bankruptcy Risk?