Search Results
Showing results 1 to 10 of approximately 15.
(refine search)
Journal Article
Tracking Consumer Credit Trends
Troy Davig and William Xu find that a larger share of consumers with low credit scores are increasing their debt than those with high credit scores.
Texas Subprime Borrowers Rely on Unconventional Home Loans
How do low- and moderate-income Texans fare in becoming homeowners?
Working Paper
Screening on Loan Terms: Evidence from Maturity Choice in Consumer Credit
We exploit a natural experiment in the largest online consumer lending platform to provide the first evidence that loan terms, in particular maturity choice, can be used to screen borrowers based on their private information. We compare two groups of observationally equivalent borrowers who took identical unsecured 36-month loans; for only one of the groups, a 60-month loan was also available. When a long-maturity option is available, fewer borrowers take the short-term loan, and those who do default less. Additional findings suggest borrowers self-select on private information about their ...
Report
A Mixed-Methods Exploration of Consumer Credit Trends by Age in the Third Federal Reserve District
While there is growing awareness of the importance of consumer credit use for the broader economy, less is understood about the full context of borrowers? balance sheets and how financial challenges change over a credit user?s lifecycle. Responding to this knowledge gap, this report takes a comparative look at the use of credit among Third Federal Reserve District residents across three age groups (18 to 34, 35 to 54, and 55 to 84 years). Combining analysis of credit bureau data with insights from interviews with housing and credit counselors, this report provides a comprehensive overview of ...
Working Paper
Effects of Wildfire Destruction on Migration, Consumer Credit, and Financial Distress
The scale of wildfire destruction has grown exponentially in recent years, destroying nearly 25,000 buildings in the United States during 2018 alone. However, there is still limited research exploring how wildfires affect migration patterns and household finances. In this study, we evaluate the effects of wildfire destruction on in-migration and out-migration probability at the Census tract level in the United States from 1999 to 2018. We then shift to the individual level and examine changes in homeownership, consumer credit usage, and financial distress among people whose neighborhood ...
Working Paper
Household Debt and Local Public Finances
In the wake of the Great Recession, steep declines in state and local government expenditures and employment were a large and persistent source of economic weakness. The business cycle was also characterized by large increases and decreases in household debt. We estimate the extent to which variation in local government revenues and expenditures can be explained by variation in the expansion of household debt from 2002 to 2007, and the contraction thereafter. We merge individual credit balance data with municipal financial data from the Census of Governments. Using Census block indicators, we ...
Working Paper
A New Look at the Effects of the Interest Rate Ceiling in Arkansas
Arkansas has been a popular place to study the effects of rate ceilings because of its exceptionally low interest rate ceiling. This paper examines the effects of the Arkansas rate ceiling on credit use by nonprime consumers in Arkansas, who are especially vulnerable to credit rationing because of the low ceiling. We compare the level and composition of consumer debt of nonprime consumers in Arkansas with that of prime Arkansas consumers and also nonprime consumers in the neighboring states. We find that nonprime consumers in Arkansas are less likely to have consumer debt and, conditional on ...
Working Paper
FinTech and Banks: Strategic Partnerships That Circumvent State Usury Laws
Previous research has found evidence suggesting that financial technology (FinTech) lenders seek out opportunities in markets that have been underserved by mainstream banks. The research focuses primarily on the effect of bank market structure, limited income, and economic hardship in attracting FinTech companies to underserved markets. This paper expands the scope of FinTech research by investigating the role of interest rate regulation of consumer credit and institutional risk segmentation in FinTech lenders' efforts to solicit new customers in the personal loan market. We find that ...
Working Paper
Extreme Wildfires, Distant Air Pollution, and Household Financial Health
We link detailed wildfire burn, satellite smoke plume, and ground-level pollution data to estimate the effects of extreme wildfire and related smoke and air pollution events on housing and consumer financial outcomes. Findings provide novel evidence of elevated spending, indebtedness, and loan delinquencies among households distant from the burn perimeter but exposed to high levels of wildfire-attributed air pollution. Results also show higher levels of financial distress among renters in the burn zone, particularly those with lower credit scores. Financial distress among homeowners within ...
Working Paper
Migration as a Vector of Economic Losses from Disaster-Affected Areas in the United States
In this paper, we infuse consideration of migration into research on economic losses from extreme weather disasters. Taking a comparative case study approach and using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel, we document the size of economic losses via migration from 23 disaster-affected areas in the United States after the most damaging hurricanes, tornadoes, and wildfires on record. We then employ demographic standardization and decomposition to determine if these losses primarily reflect changes in out-migration or changes in the economic resources that ...