Discussion Paper

The Cost Structure of Consumer Finance Companies and Its Implications for Interest Rates: Evidence from the Federal Reserve Board's 2015 Survey of Finance Companies


Abstract: Interest includes compensation not only for forbearance (forgoing current income for future income) and risk bearing but also compensation for expenses incurred to originate, service, and collect loans. The latter expenses are largely fixed, not varying much with the amount of credit.

https://doi.org/10.17016/2380-7172.2610

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Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: FEDS Notes

Number: 2020-08-12