Opciones de búsqueda
Home Medios El BCE explicado Estudios y publicaciones Estadísticas Política monetaria El euro Pagos y mercados Empleo
Sugerencias
Ordenar por
No disponible en español

Sule Alan

28 February 2011
WORKING PAPER SERIES - No. 1304
Details
Abstract
We test the interest rate sensitivity of sub-prime credit card borrowers using a unique panel data set from a UK credit card company. What is novel about our contribution is that we were given details of a randomized interest rate experiment conducted by the lender between October 2006 and January 2007. We find that individuals who tend to utilize their credit limits fully do not reduce their demand for credit when subject to increases in interest rates as high as 3 percentage points. This finding is naturally interpreted as evidence of binding liquidity constraints. We also demonstrate the importance of truly exogenous variation in interest rates when estimating credit demand elasticities. We show that estimating a standard credit demand equation with non-experimental variation leads to seriously biased estimates even when conditioning on a rich set of controls and individual fixed effects. In particular, this procedure results in a large and statistically significant 3-month elasticity of credit card debt with respect to interest rates even though the experimental estimate of the same elasticity is neither economically nor statistically different from zero.
JEL Code
D11 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Theory
D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
Network
Conference on household finance and consumption

Nuestro sitio web utiliza cookies

Utilizamos cookies funcionales para almacenar las preferencias de los usuarios, cookies analíticas para mejorar el rendimiento del sitio web y cookies de terceros creadas por servicios de terceros integrados en el sitio web.

Tiene la opción de aceptarlas o rechazarlas. Para más información o para modificar sus preferencias sobre las cookies y los registros de los servidores que utilizamos, puede consultar:

Nuestra declaración completa

Más información sobre el uso de cookies