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Who is credit constrained among denied or discouraged borrowers?"


  • Albert Touna Mama
  • Jacques Ewoudou


Since the seminal work of Jappelli (1990), it has become standard to identify as liquidity-constrained, borrowers who were either turned down for credit or did not apply because they might be turned down. In this paper, we show that the so-called "denied or discouraged" proxy does not capture accurately consumers’ credit access when consumers seek credit to finance expenditure on durable goods. Our sample is drawn from the Panel Study of Income Dynamics. We document systematic misclassification of unconstrained households as constrained. We argue that: for durables, this proxy captures best the intensity put forth by the borrower when shopping for a loan.

Suggested Citation

  • Albert Touna Mama & Jacques Ewoudou, 2010. "Who is credit constrained among denied or discouraged borrowers?"," Working Papers 199, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:199

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    More about this item


    Borrowing constraints; Mortgage loans; Consumer search;

    JEL classification:

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

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