The value of a good credit reputation: Evidence from credit card renegotiations

• 成果类型: Article
• 署名作者: Liberman, Andres
• 署名单位: New York University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.02.004
• 发表日期: 2016
• 页码: 644-660
• 关键词: Credit reputation; RENEGOTIATION; Consumer credit

摘要

I exploit a natural experiment to estimate borrowers' willingness to pay for a good credit reputation. A lender in Chile offered lower installments to borrowers who were in default. Those who owed more than a fixed arbitrary cutoff were additionally offered a clean public repayment record. Using the cutoff in a fuzzy regression discontinuity design, I show that borrowers are willing to pay the equivalent of 11% of their monthly income for a good reputation. Borrowers use their reputation to take on more debt with other banks, but default more. Thus, renegotiations may impose informational externalities on other lenders. (C) 2016 Elsevier B.V. All rights reserved.