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Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19

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  • Jason Allen
  • Robert Clark
  • Shaoteng Li
  • Nicolas Vincent

Abstract

This paper analyzes the effectiveness of debt-relief programs targeting short-run household liquidity constraints implemented in Canada in response to the COVID-19 pandemic. These programs allowed individuals to push off mortgage and credit card payments and cut in half interest rates on credit card debt. Using credit bureau data, we document that, despite potential savings above $4 billion, enrollment was limited: 24% for mortgages and 7% for credit cards. By exploiting the richness of our data set, we provide evidence that close to 80% of individuals were unaware of the credit card relief program while others faced important fixed non-monetary costs preventing uptake.

Suggested Citation

  • Jason Allen & Robert Clark & Shaoteng Li & Nicolas Vincent, 2021. "Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19," Staff Working Papers 21-13, Bank of Canada.
    • Handle: RePEc:bca:bocawp:21-13
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    Cited by:

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    2. Ho, Anson T.Y. & Morin, Lealand & Paarsch, Harry J. & Huynh, Kim P., 2022. "A flexible framework for intervention analysis applied to credit-card usage during the coronavirus pandemic," International Journal of Forecasting, Elsevier, vol. 38(3), pages 1129-1157.

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    More about this item

    Keywords

    Credit and credit aggregates; Coronavirus disease (COVID-19); Debt management;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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