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Credit Constraints in the Market for Consumer Durables: Evidence from Micro Data on Car Loans

  • Orazio Attanasio
  • Pinelopi K. Goldberg
  • Ekaterini Kyriazidou

We investigate the empirical significance of borrowing constraints in the market for consumer loans. We set up a theoretical model of consumer loan demand, which in the presence of credit rationing implies restrictions on the elasticities of loan demand with respect to the interest rate and the maturity of the loan. We estimate these elasticities and test the theoretical implications using micro data from the Consumer Expenditure Survey (1984-1995) on auto loan contracts. The econometric specification that we employ accounts for important features of the data: selection, censoring, and simultaneity. Our results suggest that credit constraints are binding for some groups in the population, in particular for young and low-income households.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7694.

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Date of creation: May 2000
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Publication status: published as 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, 05.
Handle: RePEc:nbr:nberwo:7694
Note: EFG
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