Competition and selection in credit markets

• 成果类型: Article
• 署名作者: Yannelis, Constantine; Zhang, Anthony Lee
• 署名单位: University of Chicago
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.103710
• 发表日期: 2023
• 关键词: imperfect competition; screening; credit markets

摘要

Screening in consumer credit markets is often associated with large fixed costs. We present both theory and evidence that, when lenders use fixed-cost technologies to screen borrowers, increased competition may increase rather than decrease interest rates in subprime consumer credit markets. In more competitive markets, lenders have lower market shares, and thus lower incentives to invest in screening. Thus, when markets are competitive, all lenders face a riskier pool of borrowers, which can lead interest rates to be higher. We provide evidence for the model's predictions in the auto loan market using administrative credit panel data.(c) 2023 Elsevier B.V. All rights reserved.