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on Financial Literacy and Education |
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Issue of 2025–10–20
three papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Lucía Bertoletti; Fernando Borraz; Graciela Sanroman |
| Abstract: | This paper examines the disparity in default risk between vulnerable and non-vulnerable populations in consumer lending. We merge an exhaustive registry of loans granted in the financial system with microdata on vulnerable individuals applying for social programs. We estimate the sources of this disparity and how loan and individual characteristics influence the probability of default. We find that vulnerable individuals have a higher risk than non-vulnerable individuals. However, this difference is reduced when individual debt charac- teristics, particularly the interest rate, are considered. Specifically, interest rates explain at least 30 percent of the risk gap. We also find that the default probabilities faced by lending firms are higher than those faced by banks, but we show that this effect is partly due to interest rate divergences. Our study underscores the importance of considering individual characteristics, loan characteristics, and interest rates when assessing default risk. While recognizing their limitations, these results suggest the need for policy interventions to pro- mote financial inclusion, fair interest rate practices, and financial education, especially for vulnerable populations. |
| Keywords: | consumer lending, default, interest rate, poverty |
| JEL: | G21 G23 G51 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ude:wpaper:0524 |
| By: | Deschacht, Nick (KU Leuven); Guillemyn, Inés (University of Antwerp); Vujic, Suncica (University of Antwerp) |
| Abstract: | This study estimates individuals’ willingness to pay for pension benefits using a discrete choice experiment with fictitious job advertisements conducted among workers in the United Kingdom (UK). The results indicate that workers are willing to trade off current pay for additional pension benefits, with the marginal worker willing to forgo 0.3% of their current wage for a one percentage point increase in pension benefits. Willingness to pay varies significantly across individuals, increasing with proximity to retirement age, higher income levels, financial planning and financial literacy. |
| Keywords: | discrete choice experiment (DCE), wage-pension trade-off, United Kingdom |
| JEL: | C9 D9 J16 J32 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18164 |
| By: | Felix Aidala; Gizem Koşar; Daniel Mangrum; Wilbert Van der Klaauw |
| Abstract: | Consumer demand for “Buy Now, Pay Later” (BNPL) has surged, but the specific attributes consumers value remain unclear. We conduct a novel probabilistic stated choice experiment varying BNPL attributes across hypothetical scenarios to estimate consumers’ underlying preferences and their willingness to pay (WTP) for each feature. Consumers have a negative WTP for the standard bundle, on average, but younger and lower income consumers have stronger demand. Simulating consumer demand with estimated preference parameters reveals that most shifts away from the standard BNPL bundle reduce demand and create a more negatively selected pool of BNPL users, especially when interest is charged. |
| Keywords: | Buy Now Pay Later (BNPL); payment services; financial inclusion; probabilistic stated choices; survey experiment |
| JEL: | G51 G41 C93 R22 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101928 |