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Lending technologies and consumer defaults in times of crisis: Evidence from Brazil

Author

Listed:
  • Barthman, Gabriel
  • Moura, Matheus
  • Norden, Lars

Abstract

We investigate the role of lending technologies in consumer credit defaults in Brazil before and during the COVID-19 pandemic. First, relationship borrowers are less likely to default than others before the pandemic. Second, this effect persists during the pandemic, but it becomes around 60 % smaller. Third, we document important heterogenous effects. Relationship borrowers of appliance finance default less during the pandemic than the ones of general-purpose cash loans. Finally, female relationship borrowers are less likely to default during the pandemic, plausibly because of the higher job uncertainty and the increase of informal jobs for Brazilian women during the COVID-19.

Suggested Citation

  • Barthman, Gabriel & Moura, Matheus & Norden, Lars, 2024. "Lending technologies and consumer defaults in times of crisis: Evidence from Brazil," Finance Research Letters, Elsevier, vol. 62(PB).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324002666
    DOI: 10.1016/j.frl.2024.105236
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    References listed on IDEAS

    as
    1. Khandker, S.R. & Khalily, B. & Khan, Z., 1995. "Grameen Bank: Performance and Sustainability," World Bank - Discussion Papers 306, World Bank.
    2. Allen N. Berger & Christa H. S. Bouwman & Lars Norden & Raluca A. Roman & Gregory F. Udell & Teng Wang, 2024. "Piercing through Opacity: Relationships and Credit Card Lending to Consumers and Small Businesses during Normal Times and the COVID-19 Crisis," Journal of Political Economy, University of Chicago Press, vol. 132(2), pages 484-551.
    3. Shahriar, Abu Zafar M. & Unda, Luisa A. & Alam, Quamrul, 2020. "Gender differences in the repayment of microcredit: The mediating role of trustworthiness," Journal of Banking & Finance, Elsevier, vol. 110(C).
    4. Puri, Manju & Rocholl, Jörg & Steffen, Sascha, 2017. "What do a million observations have to say about loan defaults? Opening the black box of relationships," Journal of Financial Intermediation, Elsevier, vol. 31(C), pages 1-15.
    5. Feinberg, Richard A, 1986. "Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 13(3), pages 348-356, December.
    6. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November.
    7. Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-381, July.
    8. Zhao, Yijia (Eddie), 2021. "Does credit type matter for relationship lending? The special role of bank credit lines," Finance Research Letters, Elsevier, vol. 38(C).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumer credit; Household finance; Credit default; Relationship lending; Appliance finance; Gender gaps;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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