Who is credit constrained among denied or discouraged borrowers?"
AbstractSince the seminal work of Jappelli (1990), it has become standard to identify as liquidity-constrained, borrowers who were either turned down for credit or did not apply because they might be turned down. In this paper, we show that the so-called â€œdenied or discouragedâ€ proxy does not capture accurately consumersâ€™ credit access when consumers seek credit to finance expenditure on durable goods. Our sample is drawn from the Panel Study of Income Dynamics. We document systematic misclassification of unconstrained households as constrained. We argue that: for durables, this proxy captures best the intensity put forth by the borrower when shopping for a loan.
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Bibliographic InfoPaper provided by Economic Research Southern Africa in its series Working Papers with number 199.
Length: 19 pages
Date of creation: 2010
Date of revision:
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Borrowing constraints; Mortgage loans; Consumer search;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-AFR-2010-12-11 (Africa)
- NEP-ALL-2010-12-11 (All new papers)
- NEP-CMP-2010-12-11 (Computational Economics)
- NEP-ENE-2010-12-11 (Energy Economics)
- NEP-MAC-2010-12-11 (Macroeconomics)
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