Working Paper: NBER ID: w26808
Authors: Benjamin J. Keys; Neale Mahoney; Hanbin Yang
Abstract: We use credit report data to study consumer financial distress in America. We show there are large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy.
Keywords: No keywords provided
JEL Codes: G51; K35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual characteristics (Z13) | debt collections (H63) |
| individual characteristics (Z13) | credit card delinquency (G51) |
| place-based factors (R32) | personal bankruptcy (K35) |
| individual characteristics (Z13) | entry into financial distress (G33) |
| place-based factors (R32) | mechanisms for exiting financial distress (G33) |
| state-level bankruptcy laws (K35) | bankruptcy behaviors (K35) |
| local legal factors (R38) | bankruptcy decisions (K35) |