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Consumer Credit (consumer + credit)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting87%

Selected Abstracts

DEALER PRICING OF CONSUMER CREDIT*

INTERNATIONAL ECONOMIC REVIEW, Issue 4 2005
Giuseppe Bertola
Price discrimination incentives may induce dealers to bear the financial cost of their customers' credit purchases. We focus on how financial market imperfections make it possible to segment the customer population. When borrowing and lending rates differ from each other and from the rate of interest on a durable good purchase, the structure of those rates influences customers' choices to purchase on credit or cash terms, and the scope for dealers' price discrimination. Empirical analysis of a set of installment-credit, personal-loan, and regional interest rate data offers considerable support to the assumptions and implications of our theoretical framework. [source]

A Quantitative Theory of Unsecured Consumer Credit with Risk of Default

ECONOMETRICA, Issue 6 2007
Satyajit Chatterjee
We study, theoretically and quantitatively, the general equilibrium of an economy in which households smooth consumption by means of both a riskless asset and unsecured loans with the option to default. The default option resembles a bankruptcy filing under Chapter 7 of the U.S. Bankruptcy Code. Competitive financial intermediaries offer a menu of loan sizes and interest rates wherein each loan makes zero profits. We prove the existence of a steady-state equilibrium and characterize the circumstances under which a household defaults on its loans. We show that our model accounts for the main statistics regarding bankruptcy and unsecured credit while matching key macroeconomic aggregates, and the earnings and wealth distributions. We use this model to address the implications of a recent policy change that introduces a form of "means testing" for households contemplating a Chapter 7 bankruptcy filing. We find that this policy change yields large welfare gains. [source]

Welfare, Work and Banking: The Use of Consumer Credit by Current and Former TANF Recipients in Charlotte, North Carolina

JOURNAL OF URBAN AFFAIRS, Issue 4 2005
Michael A. Stegman
Using data from a 2001 North Carolina household survey of low-income households, we analyze banking and credit behavior of current and recent welfare recipients in Charlotte, North Carolina. Other things equal, TANF families are 70% less likely than other low-income families to have a bank account and much more likely to have participated in a credit counseling program. Except for more frequent contact with bill collectors and credit counselors, leavers are no different from other low income families struggling to make ends meet. Race also matters when it comes to accessing mainstream banking and credit systems. Targeted programs help TANF families gain greater access to the financial mainstream. When it comes to specialization programs, however, those involved in the welfare system are not very different from other poor families. However, by virtue of their formal involvement with TANF, this population can be more efficiently served than other low-income populations. For this reason and the desire to keep families from recycling back onto welfare rolls, TANF programs should address banking and credit issues. [source]

Consumer credit and monetary policy in Malaysia

INTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 3 2008
Salina Hj.
Abstract What is the impact of monetary policy on the Malaysian consumer? The study addresses this issue by empirically investigating the consequences of interest rate shocks on consumer credit in Malaysia. The study relies on the impulse response functions and the variance decomposition analysis based on the structural Vector Auto-regression methodology. Apart from analysing the responses of aggregate consumer loans (ACL) to interest rate changes, further disaggregation is made in efforts to arrive at more detailed findings. In particular, the ACL data are categorized into loans for purchase of residential property, loans for personal uses, loans for credit cards, loans for purchase of consumer durables, loans for purchase of passenger cars and loans for purchase of securities. Through this disaggregation, the study shows the relative sensitivity of the various types of consumer loans to interest rate shocks. [source]

The sustainability of consumer credit growth in late twentieth century Australia

INTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 1 2000
Margaret Griffiths
This article reports on a study about the use of credit by Australian consumers between 1980 and 1996. Considerable growth in the use of credit by consumers was coupled with an increasing reliance on credit to finance purchase transactions as consumers' other sources of purchase finance became depleted. An increasing number of consumers were found to be experiencing difficulty meeting their debt- servicing commitments. These results suggest that the growth in use of consumer credit that has occurred in Australia may not be in the long-term interest of consumers or the economy. [source]

Materialism as a predictor variable of low income consumer behavior when entering into installment plan agreements

JOURNAL OF CONSUMER BEHAVIOUR, Issue 1 2008
Mateus Canniatti Ponchio
This paper explores the influence of materialism on consumer indebtedness among low income individuals who live in poor regions of Sao Paulo. A materialism scale was adapted to this context and used to describe the level of materialism among the population surveyed. Results obtained relative to the relationship between materialism and socio-demographic variables are compared to those of previous studies. A logistic regression model was developed in order to characterize individuals who have an installment plan payment booklet,the main source of consumer credit for the population studied,and to differentiate them from those who do not, based on the materialism level, socio-demographic variables and purchasing and consumer habits. The proposed model confirms materialism as a behavioral variable that is useful for forecasting the probability of an individual getting into debt in order to consume. Income had the biggest relative influence on the regression model, followed by materialism and age, controlled by gender. Copyright © 2008 John Wiley & Sons, Ltd. [source]

Obesity as Market Failure: Could a ,Deliberative Economy' Overcome the Problems of Paternalism?

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 2 2009
Paul Anand
SUMMARY The paper argues that the problem of obesity can usefully be seen as illustrating a new kind of market failure. At the heart of such failures is the emergence of a sub-optimal choice environment which, though derived from a large number of small individual optimising decisions, is not the choice environment that people would choose if they were able to choose the environment itself. This idea is claimed to be consistent with modern economic theories of freedom of choice and applicable particularly to choice environments that emerge in highly competitive market situations. The retail supply of food and consumer credit is discussed by way of example. Concluding, the paper develops the concept of a ,deliberative economy' as an alternative to liberal paternalism and explores conditions under which such an approach to social choice might deliver desirable outcomes. [source]