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Consumer Credit: Evidence From Italian Micro Data

  • Rob Alessie

    (Utrecht University,)

  • Stefan Hochguertel

    (Free University, Amsterdam,)

  • Guglielmo Weber

    (Università di Padova, CEPR and IFS,)

In this paper we analyse unique data on credit applications received by the leading provider of consumer credit in Italy (Findomestic). The data set covers a five-year period (1995-1999) during which the consumer credit market rapidly expanded in Italy and a new law (the usury law) came into force that set a limit on interest rates charged to consumers. We compute behavioural changes by controlling for changes in the observable characteristics of the Findomestic clientele and argue that, under suitable identifying assumptions, these changes can be given a structural interpretation. If the usury shock is assumed to have affected credit supply but not credit demand-that is, if the usury law had a differential impact on the supply of various types of credit but a uniform impact on demand-then we can identify and estimate a demand equation. Our key finding is that demand is interest-rate elastic, particularly in the more affluent North. (JEL: D14, E21, G21) Copyright (c) 2005 by the European Economic Association.

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Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 3 (2005)
Issue (Month): 1 (03)
Pages: 144-178

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Handle: RePEc:tpr:jeurec:v:3:y:2005:i:1:p:144-178
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  1. J, A, Abowd & Bruno Crépon & Francis Kramarz, 1997. "Moment Estimation with Attrition," Working Papers 97-35, Centre de Recherche en Economie et Statistique.
  2. Luigi Guiso & Tullio Jappelli, 1999. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CSEF Working Papers 17, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  3. Orazio Attanasio & Pinelopi K. Goldberg & Ekaterini Kyriazidou, 2000. "Credit Constraints in the Market for Consumer Durables: Evidence from Micro Data on Car Loans," NBER Working Papers 7694, National Bureau of Economic Research, Inc.
  4. repec:fth:inseep:9735 is not listed on IDEAS
  5. Crepon, Bruno & Kramarz, Francis & Trognon, Alain, 1997. "Parameters of interest, nuisance parameters and orthogonality conditions An application to autoregressive error component models," Journal of Econometrics, Elsevier, vol. 82(1), pages 135-156.
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