IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/doi10.1086-693037.html
   My bibliography  Save this article

Precommitments for Financial Self-Control? Micro Evidence from the 2003 Korean Credit Crisis

Author

Listed:
  • SungJin Cho
  • John Rust

Abstract

We analyze high-frequency micro panel data on customers of a major Korean credit card company before and after the 2003 Korean credit crisis and find evidence of pervasive precommitment behavior that is difficult to explain using standard economic theories: (1) customers voluntarily reduce their credit card borrowing limits without any compensation, (2) customers turn down interest-free installment loan offers with high probability, and (3) of the small fraction of customers who do accept interest-free loan offers, most precommit to pay off the loan over a shorter term than the maximum allowed term under the offer.

Suggested Citation

  • SungJin Cho & John Rust, 2017. "Precommitments for Financial Self-Control? Micro Evidence from the 2003 Korean Credit Crisis," Journal of Political Economy, University of Chicago Press, vol. 125(5), pages 1413-1464.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/693037
    DOI: 10.1086/693037
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/693037
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/693037
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/693037?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marie-Hélène Felt & Fumiko Hayashi & Joanna Stavins & Angelika Welte, 2021. "Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States," Staff Working Papers 21-8, Bank of Canada.
    2. Lukas, M., 2019. "Relative prices and product substitution: Evidence from shocks to consumer credit interest rates," Journal of Behavioral and Experimental Finance, Elsevier, vol. 21(C), pages 39-49.
    3. Marie-Hélène Felt & Fumiko Hayashi & Joanna Stavins & Angelika Welte, 2020. "Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada," Working Papers 20-13, Federal Reserve Bank of Boston.
    4. Vihriälä, Erkki, 2023. "Self-imposed liquidity constraints via voluntary debt repayment," Journal of Financial Economics, Elsevier, vol. 150(2).
    5. Shoji, Masahiro & Cato, Susumu & Ito, Asei & Iida, Takashi & Ishida, Kenji & Katsumata, Hiroto & McElwain, Kenneth Mori, 2022. "Mobile health technology as a solution to self-control problems: The behavioral impact of COVID-19 contact tracing apps in Japan," Social Science & Medicine, Elsevier, vol. 306(C).
    6. Beshears, John & Choi, James J. & Harris, Christopher & Laibson, David & Madrian, Brigitte C. & Sakong, Jung, 2020. "Which early withdrawal penalty attracts the most deposits to a commitment savings account?," Journal of Public Economics, Elsevier, vol. 183(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:doi:10.1086/693037. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.