Contract Pricing in Consumer Credit Markets

• 成果类型: Article
• 署名作者: Einav, Liran; Jenkins, Mark; Levin, Jonathan
• 署名单位: Stanford University; National Bureau of Economic Research; University of Pennsylvania
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.3982/ECTA7677
• 发表日期: 2012
• 页码: 1387-1432
• 关键词: information

摘要

We analyze subprime consumer lending and the role played by down payment requirements in screening high-risk borrowers and limiting defaults. To do this, we develop an empirical model of the demand for financed purchases that incorporates both adverse selection and repayment incentives. We estimate the model using detailed transaction-level data on subprime auto loans. We show how different elements of loan contracts affect the quality of the borrower pool and subsequent loan performance. We also evaluate the returns to credit scoring that allows sellers to customize financing terms to individual applicants. Our approach shows how standard econometric tools for analyzing demand and supply under imperfect competition extend to settings in which firms care about the identity of their customers and their postpurchase behavior.