Economic scarcity and consumers' credit choice

Arbeitspapier

This paper documents that increased scarcity right before a payday causally impacts credit choices. Exploiting a transfer system that randomly assigns the number of days between paydays to Swedish social welfare recipients, we find that low educated borrowers behave as if they are more present-biased when making credit choices during days when their budget constraints are exogenously tighter. As a result their default risk and debt servicing cost increase significantly. Access to mainstream credit or liquidity buffers cannot explain our results. Our findings highlight that increased levels of economic scarcity risk to reinforce the conditions of poverty.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Sveriges Riksbank Working Paper Series ; No. 329

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Household Saving; Personal Finance ; Criteria for Decision-Making under Risk and Uncertainty
• Thema: household finance ; present bias ; scarcity ; credit choice

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Bos, Marieke ; Le Coq, Chloé ; van Santen, Peter
• Ereignis: Veröffentlichung
• (wer): Sveriges Riksbank
• (wo): Stockholm
• (wann): 2016

Weitere Informationen

• Handle: http://hdl.handle.net/10419/189929
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ