Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology derived from theoretical models. We randomized 58,000 direct mail...

We use survey data from a sample of UK households to analyse the relationship between financial literacy and consumer credit portfolios. We show that individuals who borrow on consumer credit exhibit worse financial literacy than those who do not. Borrowers with poor financial literacy hold...

Problematic personal debts and associated outcomes, such as bankruptcy and foreclosure, lead to significant declines in psychological health. This article summarises the recent literature and discusses the key issues in measurement and causality. Medical studies show that problem debts are...

We use UK survey data to analyze the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we name the ‘co-holding puzzle’. Approximately 12% of households in our sample co-hold, on average, £3800 of revolving...

We use UK household survey data incorporating measures of financial literacy and behavioural characteristics to analyse the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we term the ‘co-holding puzzle’....

We survey a representative sample of UK consumers on their understanding of core ‘financial literacy’ concepts in consumer credit. We find levels of financial literacy are generally low in the population. We also find levels of financial literacy are on average actually lower among those who...

We use UK survey data incorporating measures of financial literacy and behavioral characteristics to analyze the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we term the ‘co-holding puzzle’. Approximately...

We use survey data from a sample of UK households to analyse the association between financial literacy and consumer credit portfolios. Among users of consumer credit there is much variation in levels of financial literacy. Borrowers with poor financial literacy hold higher shares of high cost...