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Consumer credit in an emerging economy: Demand, supply, and liquidity restrictions

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  • Arango, Luis E.
  • Cardona-Sosa, Lina

Abstract

Using a rich set of microdata from a credit union in Colombia, we estimate the factors behind the consumer credit demand and provide evidence of credit constraints from different perspectives including the lack of response of low-income customers to the interest rate. We also show the different ways in which the credit union implements additional rationing such as denying and trimming down the credit requests. For this, the credit union uses the scores and indebtedness of individuals. Finally, we estimate the supply of consumer credit where the interest rate, income, scores, and indebtedness are fundamental.

Suggested Citation

  • Arango, Luis E. & Cardona-Sosa, Lina, 2023. "Consumer credit in an emerging economy: Demand, supply, and liquidity restrictions," Emerging Markets Review, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:ememar:v:54:y:2023:i:c:s1566014122000668
    DOI: 10.1016/j.ememar.2022.100949
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    More about this item

    Keywords

    Consumer credit; Credit constraints; Score; Indebtedness;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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