Perceived Precautionary Savings Motives: Evidence from Fintech

63 Pages Posted: 16 Mar 2020 Last revised: 26 Mar 2020

See all articles by Francesco D'Acunto

Francesco D'Acunto

Boston College

Thomas Rauter

University of Chicago - Booth School of Business

Christoph Scheuch

Vienna Graduate School of Finance (VGSF); WU (Vienna University of Economics and Business)

Michael Weber

University of Chicago - Finance

Multiple version iconThere are 3 versions of this paper

Date Written: March 2020

Abstract

We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, liquid users react more than others but do not tap into negative deposits. The credit line acts as a form of insurance. These results are not fully consistent with models of financial constraints, buffer stock models, or present-bias preferences. We label this channel perceived precautionary savings motives: Liquid users behave as if they faced strong precautionary savings motives even though no observables, including elicited preferences and beliefs, suggest they should.

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Suggested Citation

D'Acunto, Francesco and Rauter, Thomas and Scheuch, Christoph and Weber, Michael, Perceived Precautionary Savings Motives: Evidence from Fintech (March 2020). NBER Working Paper No. w26817, Available at SSRN: https://ssrn.com/abstract=3554858

Francesco D'Acunto (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Thomas Rauter

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Christoph Scheuch

Vienna Graduate School of Finance (VGSF) ( email )

Welthandelsplatz 1
Vienna, A-1020
Austria

HOME PAGE: http://christophscheuch.github.io/

WU (Vienna University of Economics and Business) ( email )

Welthandelsplatz 1
Vienna, A-1020
Austria

HOME PAGE: http://bach.wu.ac.at/d/research/ma/14198/

Michael Weber

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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