Abstract

https://ssrn.com/abstract=2281358
 


 



Access to Home Equity and Consumption: Evidence from a Policy Experiment


Sumit Agarwal


Georgetown University - Department of Finance

Wenlan Qian


National University of Singapore - NUS Business School

September 29, 2015


Abstract:     
Using unique consumer financial transactions of more than 56,000 consumers, we study the consumption response to a housing policy experiment in Singapore that resulted in a decrease in access to home equity. Using difference-in-differences analysis, we find a significant negative consumption response to the policy shock. Moreover, the consumption response is concentrated in credit card spending, and is stronger among individuals with limited access to credit market or with high precautionary saving motive. These results suggest that a decrease in access to home equity reduces the role of housing as a self-insurance mechanism for consumption smoothing.

Number of Pages in PDF File: 47

Keywords: Consumption, Spending, Debt, Credit Cards, Home Equity, Household Finance, Banks, Loans, Durable Goods, Discretionary Spending, Precautionary Savings, Credit Constraints

JEL Classification: D12, D14, D91, E21, E51, E62, G21, H31


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Date posted: June 19, 2013 ; Last revised: September 30, 2015

Suggested Citation

Agarwal, Sumit and Qian, Wenlan, Access to Home Equity and Consumption: Evidence from a Policy Experiment (September 29, 2015). Available at SSRN: https://ssrn.com/abstract=2281358 or http://dx.doi.org/10.2139/ssrn.2281358

Contact Information

Sumit Agarwal (Contact Author)
Georgetown University - Department of Finance ( email )
3700 O Street, NW
Washington, DC 20057
United States
202-687-8207 (Phone)
HOME PAGE: http://www.ushakrisna.com

Wenlan Qian
National University of Singapore - NUS Business School ( email )
15 Kent Ridge Drive
Singapore 117592, 119245
Singapore
(65) 65163015 (Phone)
HOME PAGE: http://sites.google.com/site/wenlanqian/
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