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Consumer Credit: Evidence from Italian Micro Data

Author

Listed:
  • Alessie, Rob
  • Hochguertel, Stefan
  • Weber, Guglielmo

Abstract

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 (1995-99) during which the consumer credit market rapidly expanded in Italy and a new law came into force that set a limit to interest rates charged to consumers (the usury law). We investigate ways in which the law may have affected the consumer credit market and show how the applicants’ pool has changed over time in comparison to a representative sample of the Italian population. 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 , we can identify and estimate a demand equation. Our key finding is that demand is interest rate elastic, particularly in the North, where the consumer credit market is more competitive.

Suggested Citation

  • Alessie, Rob & Hochguertel, Stefan & Weber, Guglielmo, 2001. "Consumer Credit: Evidence from Italian Micro Data," CEPR Discussion Papers 3071, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3071
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    References listed on IDEAS

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    1. 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.
    2. Guiso, Luigi & Jappelli, Tullio, 2002. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 315-339, May.
    3. repec:crs:wpaper:9735 is not listed on IDEAS
    4. Orazio P. Attanasio & Pinelopi Koujianou Goldberg & Ekaterini Kyriazidou, 2008. "Credit Constraints In The Market For Consumer Durables: Evidence From Micro Data On Car Loans," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 401-436, May.
    5. JM Abowd & Bruno Crépon & Francis Kramarz, 1997. "Moment Estimation with Attrition," Working Papers 97-35, Center for Research in Economics and Statistics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    choice-based sample; consumer credit; usury;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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