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Working Paper
Borrowers in Search of Feedback : Evidence from Consumer Credit Markets
We study recent technological innovation in credit markets and document their role in providing information to households. We show that households value the ability to learn detailed information about their cost of credit. This function is most valued by less creditworthy households with less experience in credit markets. To measure the demand for information provision we exploit a quasi-natural experiment in an online consumer credit market. A large lending platform unexpectedly switched from pricing loans through an auction mechanism to centralized pricing determined by broad credit grade. ...
Working Paper
Loan guarantees for consumer credit markets
Loan guarantees are arguably the most widely used policy intervention in credit markets, especially for consumers. This may be natural, as they have several features that, a priori, suggest that they might be particularly effective in improving allocations. However, despite this, little is actually known about the size of their effects on prices, allocations, and welfare. ; In this paper, we provide a quantitative assessment of loan guarantees, in the context of unsecured consumption loans. Our work is novel as it studies loan guarantees in a rich dynamic model where credit allocation is ...
Briefing
Deterring default: why some state laws decrease the probability of mortgage foreclosures
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.
Periodic Essay
Shifting fortunes: wealth trends in the Federal Reserve’s survey of consumer finances
Short essays related to research on understanding and strengthening the balance sheets of American households.
Briefing
Where are households in the deleveraging cycle?
The ratio of household debt to disposable personal income fell rapidly during the recession of 2007-09 as consumers defaulted on loans, paid down debt, and took out fewer loans. According to some economists, this household debt reduction ? "deleveraging" ? has constrained consumer spending, contributing to a longer, deeper recession and a slower recovery. As households strengthen their balance sheets, their ability to take on new debt to finance consumption is improving, but household debt remains elevated by historical standards, and other determinants of consumer spending remain weak.
Periodic Essay
Unsteady progress: income trends in the Federal Reserve's survey of consumer finances
Short essays related to research on understanding and strengthening the balance sheets of American households.
Journal Article
The cost of unanticipated household finance shocks : two examples
This article presents two simple calculations aimed at providing a first step in quantifying the costs of unanticipated financial shocks to a household. The two types of shocks considered are (1) an unanticipated drop in net worth and (2) an unexpected increase in the interest rate on borrowing. The shocks are faced by households in a life-cycle consumption-savings model and the costs are measured in terms of annual consumption. In general, for empirically plausible shocks, the results show that net worth shocks are substantially costlier than interest rate shocks. The costs of the shocks ...
Journal Article
Interview: Christopher Carroll
Related Links: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2013/q1/full_interview.cfm https://www.richmondfed.org/publications/research/econ_focus/2013/q1/interview_weblinks.cfm
Journal Article
Changes in U.S. family finances from 2007 to 2010: evidence from the Survey of Consumer Finances
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 ...
Journal Article
Changes in U.S. family finances from 2007 to 2010: evidence from the Survey of Consumer Finances
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 ...