Misfortune and Mistake: The Financial Conditions and Decision-Making Ability of High-Cost Loan Borrowers

• 成果类型: Article
• 署名作者: Carvalho, Leandro; Olafsson, Arna; Silverman, Dan
• 署名单位: University of Southern California; Copenhagen Business School; Danish Finance Institute; Center for Economic & Policy Research (CEPR); Arizona State University; Arizona State University-Tempe; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/730200
• 发表日期: 2024
• 页码: 3173-3213
• 关键词: PAYDAY LOANS; preference; Heterogeneity; education; access

摘要

The appropriateness of many high-cost loan regulations depends on whether demand is driven by financial conditions (misfortunes) or imperfect decisions (mistakes). Bank records from Iceland show that borrowers have especially low liquidity just before getting a loan. Borrowers exhibit lower decision-making ability (DMA) in linked-choice experiments: 45% of loan dollars go to the bottom 20% of the DMA distribution. Standard determinants of demand do not explain this relationship, which is also mirrored by the relationship between DMA and an unambiguous mistake. Both misfortune and mistake thus appear to drive demand.