Misfortune and Mistake : The Financial Conditions and Decision-Making Ability of High-Cost Loan Borrowers
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 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
Year of publication: |
[2023]
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Authors: | Olafsson, Arna ; Carvalho, Leandro ; Silverman, Dan |
Publisher: |
[S.l.] : SSRN |
Subject: | Kredit | Credit | Kapitalkosten | Cost of capital | Vermögen | Wealth | Experiment | Nachfrage | Demand | Island | Iceland | Finanzierungsentscheidung | Financing decision | Kaufentscheidung | Purchase decision |
Saved in:
freely available
Extent: | 1 Online-Ressource (76 p) |
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Series: | CESR-Schaeffer Working Paper ; No. 2023-004 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 10, 2022 erstellt |
Other identifiers: | 10.2139/ssrn.4495677 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014349774