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In many countries, lenders are restricted in their access to information about borrowers' past defaults. The authors study this provision in a model of repeated borrowing and lending with moral hazard and adverse selection. They analyze its effects on borrowers' incentives and access to credit,...
Persistent link: https://www.econbiz.de/10013114975
We analyze the effect of a bankruptcy law according to which some of the borrower's assets are exempt from liquidation in the event of default in the context of a competitive credit market characterized either by moral hazard (MH) or by adverse selection (AS). In particular, we study how the...
Persistent link: https://www.econbiz.de/10012862259
In many countries, lenders are not permitted to use information about past defaults after a specified period of time has elapsed. We model this provision and determine conditions under which it is optimal. We develop a model in which entrepreneurs must repeatedly seek external funds to finance a...
Persistent link: https://www.econbiz.de/10012706150
Bankruptcy reform in 2005 eliminated debtors' ability to discharge private student loan debt in bankruptcy. This law aimed to reduce costly defaults by diminishing the perceived incentive of some private student loan borrowers to declare bankruptcy even if they had sufficient income to service...
Persistent link: https://www.econbiz.de/10013004942
We study the financial and labor market impacts of bad credit reports. Using difference-in-differences variation from the staggered removal of bankruptcy flags, we show that bankruptcy flag removal leads to economically large increases in credit limits and borrowing. Using administrative tax...
Persistent link: https://www.econbiz.de/10012902854
Many credit cardholders in the U.S. turn to expensive payday loans, even though they have not yet exhausted their credit lines. This results in significant monetary costs and has been coined the “Payday Loan Puzzle.” We propose the novel explanation that households use payday loans to...
Persistent link: https://www.econbiz.de/10013310730
Using a unique dataset of credit card mailings, we show that during the recent credit boom, consumers with mediocre credit scores received more credit card solicitations than those with high credit scores. However, this relationship reversed after the financial crisis. We also nd that consumers...
Persistent link: https://www.econbiz.de/10013093419
Bankruptcy reform in 2005 restricted debtors' ability to discharge private student loan debt. The reform was motivated by the perceived incentive of some borrowers to file bankruptcy under Chapter 7 even if they had, or expected to have, sufficient income to service their debt. Using a national...
Persistent link: https://www.econbiz.de/10012944301
This paper uses a unique data set from credit files of six leading German banks to provide some empirical insights into their rating systems used to classify corporate borrowers. On the basis of the New Basle Capital Accord, which allows banks to use their internal rating systems to compute...
Persistent link: https://www.econbiz.de/10010317411
This paper uses a unique data set from credit files of six leading German banks to provide some empirical insights into their rating systems used to classify corporate borrowers. On the basis of the New Basle Capital Accord, which allows banks to use their internal rating systems to compute...
Persistent link: https://www.econbiz.de/10010958658