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In December days are shorter but loans are cheaper

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  • Jérémie Bertrand
  • Laurent Weill

Abstract

This study analyzes the month‐of‐the‐year effect on lending decisions. Using data from a large US peer‐to‐peer lender, we perform regressions of loan acceptance and loan rate on month dummy variables. We find evidence of a month‐of‐the‐year effect on loan acceptance and loan pricing. December is the best month to ask for a loan, with the highest chance of acceptance and the lowest rate. We test the potential explanations of the calendar anomalies and find some support for trade loading, such that granted loans might be inflated at the end of the quarter to hit quarterly targets.

Suggested Citation

  • Jérémie Bertrand & Laurent Weill, 2022. "In December days are shorter but loans are cheaper," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1335-1356, July.
    • Handle: RePEc:bla:ecinqu:v:60:y:2022:i:3:p:1335-1356
    DOI: 10.1111/ecin.13075
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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