Perceived Precautionary Savings Motives : Evidence from FinTech

In a representative sample of new borrowers, access to lines of credit increases the spending of more liquid households permanently. Liquid consumers reduce their existing savings but do not tap into negative deposits, and hence do not raise debt. Through our FinTech bank setting, we elicit consumers' risk preferences, beliefs, perceptions, and other characteristics directly. No proxies for precautionary savings motives differ systematically across liquid and illiquid consumers. Liquid consumers appear to have higher subjective beliefs about precautionary savings, despite no different objective characteristics. Our results have implication for the transmission of policy to households through bank credit