2008-02-09 papers

on Microfinance

Issue of 2008‒02‒09
one paper chosen by
Aastha Pudasainee and Olivier Dagnelie

Bounds on repayment behavior: evidence for the consumer credit market By Mario Padula; Charles Grant

Bounds on repayment behavior: evidence for the consumer credit market

By:	Mario Padula (Department of Economics, University Of Venice Cà Foscari); Charles Grant (Department of Economics, University of Reading)
Abstract:	How does the punishment for default affect repayment behavior? We use administrative data, provided by the leading Italian lender of unsecured credit to the household sector, to analyze households repayment behavior. Administrative data are particularly well suited to study what factors are responsible for default, but raise a fundamental econometric problem, since they identify the determinants of repayment behavior only for those who are granted credit. To overcome this problem, we provide upper and lower bounds on the determinants of repayment behavior. Moreover, we show how to use the restrictions from the theory to narrow the bounds.
Keywords:	Manski Bounds, Consumer Credit, Default
JEL:	D14 K42 O17
Date:	2007
URL:	http://d.repec.org/n?u=RePEc:ven:wpaper:2007_26&r=mfd

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