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Divorce and Credit

Author

Listed:
  • Shusen Qi

    (Xiamen University - School of Management)

  • Shu Chen

    (Fujian Business University)

  • Steven Ongena

    (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR))

  • Jiaxing You

    (Xiamen University)

Abstract

Does failure in a marriage foretell failure to repay credit? Analyzing the loan portfolio of a representative bank, we find no significant differences in the probability of default between divorcees and others, but we do find evidence for taste-based discrimination against divorcees. Compared to their peers, divorcees pay 8.7 basis points more in interest. This discrimination against divorcees is mainly effectuated in localities where traditional culture is more dominant and banking competition is limited, and by loan officers who are male, are older, and have been longer on the job. These findings provide valuable insights for policymakers to reduce discrimination.

Suggested Citation

  • Shusen Qi & Shu Chen & Steven Ongena & Jiaxing You, 2020. "Divorce and Credit," Swiss Finance Institute Research Paper Series 20-116, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp20116
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    More about this item

    Keywords

    discrimination; divorced borrower; loan officer;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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