The Influence of Emotion on Households' Borrowing

52 Pages Posted: 16 Feb 2022 Last revised: 12 May 2023

See all articles by William Bazley

William Bazley

University of Kansas

Sima Jannati

University of Texas at Arlington

Date Written: May 11, 2023


Innovations in financial technology have expanded individuals' access to unsecured personal loans. Building on insights from consumer behavior research that link negative emotions to credit-financed consumption, we show that transitory emotion influences households' use of online loans. Specifically, we find that a lack of positive emotion leads to greater demand for loans. However, emotion-fueled borrowing is associated with a lower likelihood of repayment. We do not find transient emotions to affect households' use of debt provided by traditional credit suppliers. Overall, our evidence highlights that emotions can have heterogeneous implications for households' borrowing depending on the convenience of the debt.

Keywords: Emotions, financial technology, peer-to-peer credit

JEL Classification: D12, D14, G40, G51

Suggested Citation

Bazley, William and Jannati, Sima, The Influence of Emotion on Households' Borrowing (May 11, 2023). Available at SSRN: or

William Bazley

University of Kansas ( email )

3143 Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States

Sima Jannati (Contact Author)

University of Texas at Arlington ( email )

701 S. West Street
Arlington, TX 76019
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics