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Report
Barriers to household risk management: evidence from India
Cole, Shawn; Gine, Xavier; Tobacman, Jeremy; Vickery, James; Townsend, Robert M.; Topalova, Petia (2009-05-01)
Financial engineering offers the potential to significantly reduce the consumption fluctuations faced by individuals, households, and firms. Yet much of this potential remains unfulfilled. This paper studies the adoption of an innovative rainfall insurance product designed to compensate low-income Indian farmers in the event of insufficient rainfall during the primary monsoon season. We first document relatively low adoption of this new risk management product: Only 5-10 percent of households purchase the insurance, even though they overwhelmingly cite rainfall variability as their most ...
Staff Reports , Paper 373

Report
Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays
Chan, Sewin; Haughwout, Andrew F.; Hayashi, Andrew; Van der Klaauw, Wilbert (2015-06-01)
The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for both ...
Staff Reports , Paper 732

Report
Credit Access and Mobility during the Flint Water Crisis
Gorton, Nicole; Pinkovskiy, Maxim L. (2021-02-01)
How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead ...
Staff Reports , Paper 960

Briefing
Deterring default: why some state laws decrease the probability of mortgage foreclosures
Ghent, Andra C.; Slivinski, Stephen; Kudlyak, Marianna (2009-09)
Many states give mortgage lenders strong legal means by which to pursue debt collection in the event of a mortgage default. In those states, probability of default is lower and the forms the default takes are often quite different from a costly conventional foreclosure.
Richmond Fed Economic Brief , Issue Sep

Discussion Paper
How and Why Do Consumers Use “Buy Now, Pay Later”?
Aidala, Felix; Mangrum, Daniel; Van der Klaauw, Wilbert (2024-02-14)
In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use ...
Liberty Street Economics , Paper 20240214

Discussion Paper
Climate Change and Consumer Finance: A Very Brief Literature Review
Canals-Cerda, Jose J.; Roman, Raluca (2021-10-06)
Extant research shows that climate change can impose significant costs on consumers’ wealth and finances. Both sea-level rise and flooding from hurricane events led to high price declines and thus wealth loss for homes in coastal areas or in disaster-struck areas, with effects lingering for a number of years in some cases. In terms of consumer finance, while the average consumer is not always significantly negatively affected by a disaster, the vulnerable groups (those with low credit scores and who are low income) can be severely affected, experiencing higher rates of delinquencies and ...
Consumer Finance Institute discussion papers , Paper 21-04

Report
Understanding Consumer Demand for “Buy Now, Pay Later”
Mangrum, Daniel; Aidala, Felix; Koşar, Gizem; Van der Klaauw, Wilbert (2025-10-01)
We estimate consumer preferences for “Buy Now, Pay Later” (BNPL) using a large-scale probabilistic stated choice survey experiment. Average willingness to pay (WTP) for the standard BNPL bundle is negative, but younger, lower-income, and less credit-worthy consumers exhibit higher demand. The share with positive estimated WTP closely matches actual BNPL take-up. Consumers strongly dislike interest charges and hard credit checks. Counterfactual simulations show that incorporating these features into the standard bundle lowers demand and worsens adverse selection toward riskier borrowers. ...
Staff Reports , Paper 1167

Journal Article
Changes in U.S. family finances from 2007 to 2010: evidence from the Survey of Consumer Finances
Kennickell, Arthur B.; Bricker, Jesse; Moore, Kevin B.; Sabelhaus, John Edward (2012-06)
The Federal Reserve Board's Survey of Consumer Finances for 2010 provides insights into changes in family income and net worth since the 2007 survey. The survey shows that, over the 2007?10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent, while mean income fell more sharply, an 11.1 percent decline. Both median and mean net worth decreased even more dramatically than income over this period, though the relative movements in the median and the mean are reversed; the median fell 38.8 percent, and the mean fell 14.7 percent. This article reviews ...
Federal Reserve Bulletin , Volume 98 , Issue June

Reciprocal deposit networks provide means to exceed FDIC’s $250,000 account cap
Ryfe, Dylan; Saretto, Alessio (2023-11-28)
Because of their prominence, reciprocal deposits are important in the broader discussion of deposit insurance. Though they have the potential to increase banks’ moral hazard, they also bring increased trust and safety to the banking system.
Dallas Fed Economics

Working Paper
The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Wellbeing
Kaestner, Robert; Mazumder, Bhashkar; Hu, Luojia; Miller, Sarah; Wong, Ashley (2016-09-21)
We examine the effect of the Medicaid expansions under the 2010 Patient Protection and Affordable Care Act (ACA) on consumer, financial outcomes using data from a major credit reporting agency for a large, national sample of adults. We employ the synthetic control method to compare individuals living in states that expanded Medicaid to those that did not. We find that the Medicaid expansions significantly reduced the number of unpaid bills and the amount of debt sent to third-party collection agencies among those residing in zip codes with the highest share of low-income, uninsured ...
Working Paper Series , Paper WP-2016-10

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