Consumer Credit: Too Much or Too Little (or Just Right)?

Journal of Legal Studies, Special Issue on Benefit-Cost Analysis of Financial Regulation, Forthcoming

27 Pages Posted: 27 Nov 2013

See all articles by Jonathan Zinman

Jonathan Zinman

Dartmouth College; Innovations for Poverty Action; Jameel Poverty Action Lab; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 21, 2013

Abstract

The intersection of research and policy on consumer credit often has a Goldilocks feel. Some researchers and policymakers posit that consumer credit markets produce too much credit. Other researchers and policymakers posit that markets produce too little credit. I review theories and evidence on inefficient consumer credit supply. For each of eight classes of theories I sketch some of the leading models and summarize any convincing empirical tests of those models. I also discuss more "circumstantial" evidence that does not map tightly into a particular model but has the potential to shed light on, or obscure, answers to key questions. Overall there is a lack of convincing evidence on whether markets err, and in which direction. We do not yet understand whether and under what conditions markets over-supply or under-supply credit, much less why.

Keywords: credit supply, lending, asymmetric information, behavioral economics, asset market externalities, microcredit, deleveraging, consumer protection

JEL Classification: D03, D14, D18, D82, E32, G21, G23, G28, R31

Suggested Citation

Zinman, Jonathan, Consumer Credit: Too Much or Too Little (or Just Right)? (November 21, 2013). Journal of Legal Studies, Special Issue on Benefit-Cost Analysis of Financial Regulation, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2358155 or http://dx.doi.org/10.2139/ssrn.2358155

Jonathan Zinman (Contact Author)

Dartmouth College ( email )

Hanover, NH 03755
United States
603-646-0075 (Phone)

HOME PAGE: http://https://sites.dartmouth.edu/jzinman/

Innovations for Poverty Action

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New Haven, CT 20009
United States

Jameel Poverty Action Lab

E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States

National Bureau of Economic Research (NBER)

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United States

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