| 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. |