Consumer Credit: Too Much or Too Little (or Just Right)?
The intersection of research and policy on consumer credit often has a Goldilocks feel. Some researchers and policymakers posit that consumer credit markets produce too much credit. Other researchers and policymakers posit that markets produce too little credit. I review theories and evidence on inefficient consumer credit supply. For each of eight classes of theories I sketch some of the leading models and summarize any convincing empirical tests of those models. I also discuss more "circumstantial" evidence that does not map tightly into a particular model but has the potential to shed light on, or obscure, answers to key questions. Overall there is a lack of convincing evidence on whether markets err, and in which direction. We do not yet understand whether and under what conditions markets over-supply or under-supply credit, much less why.
|Date of creation:||Nov 2013|
|Publication status:||published as Consumer Credit: Too Much or Too Little (or Just Right)? Jonathan Zinman The Journal of Legal Studies Vol. 43, No. S2, Benefit-Cost Analysis of Financial Regulation: A Conference Funded by the Alfred P. Sloan Foundation and Supported by the Coase-Sandor Institute for Law and Economics (June 2014), pp. S209-S237|
|Note:||DEV EFG LE|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Veronica Guerrieri & Guido Lorenzoni, 2011.
"Credit Crises, Precautionary Savings, and the Liquidity Trap,"
NBER Working Papers
17583, National Bureau of Economic Research, Inc.
- Guido Lorenzoni & Veronica Guerrieri, 2011. "Credit Crises, Precautionary Savings and the Liquidity Trap," 2011 Meeting Papers 1414, Society for Economic Dynamics.
- David Eil & Justin M. Rao, 2011. "The Good News-Bad News Effect: Asymmetric Processing of Objective Information about Yourself," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 114-138, May.
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