A Quantitative Theory of Information and Unsecured Credit
| Autor: | Eric R. Young, Kartik Athreya, Xuan S. Tam |
|---|---|
| Rok vydání: | 2012 |
| Předmět: | |
| Zdroj: | American Economic Journal: Macroeconomics. 4:153-183 |
| ISSN: | 1945-7715 1945-7707 |
| DOI: | 10.1257/mac.4.3.153 |
| Popis: | Important changes have occurred in unsecured credit markets over the past three decades. Most prominently, there have been large increases in aggregate consumer debt, the personal bankruptcy rate, the size of bankruptcies, the dispersion of interest rates paid by bor rowers, and the relative discount received by those with good credit ratings. We find that improvements in information available to lend ers on household-level costs of bankruptcy can account for a signifi cant fraction of what has been observed. The ex ante welfare gains from better information are positive but small. (JEL D14, D82, G21) For most of the postwar period, the unsecured market for credit has been small. Direct evidence from the Survey of Consumer Finances (SCF), as well as other sources (Ellis 1998), shows that unsecured credit did not appear in any signifi cant amount in the United States until the late 1960s. However, over the past three decades there have been dramatic changes in this market. First, and perhaps the most well-known attribute of the unsecured credit market in the period we consider, has been the large increase in personal bankruptcy rates, from less than 0.1 percent of households filing annually in the 1970s to more than 1 percent annually since 2002. Sullivan, Warren, and Westbrook (2000) also notes that not only are bankruptcies more common now than before, they are also larger. As measured by ratio of median net worth-to-median US household income, the size of bankruptcies grew from 0.19 in 1981 to approximately 0.26 by 1997. More generally, the use of unsecured credit has intensified. It has nearly tripled, as measured by the ratio of aggregate negative net worth to aggregate income, from 0.30 percent in 1983, to 0.67 percent in 2001, to 0.80 percent in 2004 (as measured in the SCF). Perhaps most dramatically, data from the SCF suggests that the distribution of interest rates for unsecured credit was highly concentrated in 1983 and very diffuse |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|