Working Paper: NBER ID: w19682
Authors: Jonathan Zinman
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: No keywords provided
JEL Codes: D03; D14; D18; D82; E32; G21; G23; G28; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| credit access (G21) | consumer welfare (D69) |
| market power (L11) | equilibrium quantities (D50) |
| regulatory failures (G18) | gaps in the lending ladder (G21) |
| asymmetric information (D82) | oversupply/undersupply of credit (E51) |
| credit supply shocks (E51) | consumer well-being (D18) |