| 来源类型 | Discussion paper |
| 规范类型 | 论文 |
| 来源ID | DP15570 |
| DP15570 Consumer Credit with Over-Optimistic Borrowers | |
| Florian Exler; Igor Livshits; Jim MacGee; Michele Tertilt | |
| 发表日期 | 2020-12-17 |
| 出版年 | 2020 |
| 语种 | 英语 |
| 摘要 | There is active debate over whether borrowers' cognitive biases create a need for regulation to limit the misuse of credit. To tackle this question, we incorporate over-optimistic borrowers into an incomplete markets model with consumer bankruptcy. Lenders price loans, forming beliefs - type scores - about borrowers' types. Since over-optimistic borrowers face worse income risk but incorrectly believe they are rational, both types behave identically. This gives rise to a tractable theory of type scoring as lenders cannot screen borrower types. Since rationals default less often, the partial pooling of borrowers generates cross-subsidization whereby over-optimists face lower than actuarially fair interest rates. Over-optimists make financial mistakes: they borrow too much and default too late. We calibrate the model to the US and quantitatively evaluate several policies to address these frictions: reducing the cost of default, increasing borrowing costs, imposing debt limits, and providing financial literacy education. While some policies lower debt and filings, they do not reduce overborrowing. Financial literacy education can eliminate financial mistakes, but it also reduces behavioral borrowers' welfare by ending cross-subsidization. Score-dependent borrowing limits can reduce financial mistakes but lower welfare. |
| 主题 | Macroeconomics and Growth ; Public Economics |
| 关键词 | Consumer credit Over-optimism Financial mistakes Bankruptcy Financial literacy Financial regulation Type score Cross-subsidization |
| URL | https://cepr.org/publications/dp15570 |
| 来源智库 | Centre for Economic Policy Research (United Kingdom) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/544576 |
| 推荐引用方式 GB/T 7714 | Florian Exler,Igor Livshits,Jim MacGee,et al. DP15570 Consumer Credit with Over-Optimistic Borrowers. 2020. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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