Federal Reserve Bank of Philadelphia
Debt collection agencies and the supply of consumer credit
Supersedes Working Paper 13-38/R. The activities of third-party debt collectors affect millions of borrowers. However, relatively little is known about their impact on consumer credit. To study this issue, I investigate whether state debt collection laws affect the ability of third-party debt collectors to recover delinquent debts and if this, in turn, affects the amount of credit being provided. This paper constructs, from state statutes and session laws, a state-level index of debt collection restrictions and uses changes in this index over time to estimate the impact of debt collection laws on revolving credit. Stricter debt collection regulations appear to reduce the number of third-party debt collectors and to lower recovery rates on delinquent credit card loans. This, in turn, leads to fewer openings of credit cards.
Cite this item
Viktar Fedaseyeu, Debt collection agencies and the supply of consumer credit, Federal Reserve Bank of Philadelphia, Working Papers 15-23, 19 Jun 2015.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D18 - Microeconomics - - Household Behavior - - - Consumer Protection
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
Keywords: Household finance; Consumer credit; Creditor rights; Contract enforcement; Debt collection; Law and finance
This item with handle RePEc:fip:fedpwp:15-23
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