We define predatory lending as a welfare-reducing provision of credit. Using a textbook model, we show that lenders profit if they can tempt households into “debt traps,” that is, overborrowing and delinquency. We then test whether payday lending fits our definition of predatory. We find...

Approximately half of credit card holders in the United States regularly carry unpaid credit card debt. These so-called revolvers exhibit payment behavior that differs from that of those who repay their entire credit card balance every month. Previous literature has focused on the adoption of...

We study entrepreneurs' start-up financing from banks and local financiers. An informal network, whose membership cannot be observed by outsiders, conveys the good signals it gets about the hidden types of network entrepreneurs to local financiers, which are then reflected in different loan...

The success of joint liability programs depends on nature and composition of borrowing groups. Group formation is a costly process and in our model these costs vary with the social identity of group partners. We show that risk heterogeneity in a borrowing group may arise due to the social...

Studie zu Dispozinsen / Ratenkrediten Aktenzeichen: 514-06.01-2810HS034 Laufzeit 8/2011 – 5/2012 - Zusammenfassung – In Deutschland verfügen etwa 80 Prozent der Haushalte über einen Dispositionskredit. Bei beträchtlicher Variation liegt der eingeräumte Kreditrahmen bei knapp dem 3-fachen...

This paper investigates whether self-employed households use consumer loans - in particular instalment loans and overdrafts - to finance business activities. Controlling for financial and non-financial household variables we show that self-employed households particularly use personal overdrafts...

We test the interest rate sensitivity of subprime 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...

This paper tests whether heterogeneity of time preferences can explain individual credit behavior. In a field experiment targeting individuals from low-to-moderate income households, we measure individual time preferences through choice experiments, and then match these time preference measures...

Cash-rich bidders in UK have better announcement abnormal returns than cash-poor ones during 1984-2007, contrasting previous findings in the US. The positive cash reserve effect is mainly from bidders of high long-run growth or those with non-trivial institutional holdings. Moreover, cash-rich...