Journal ArticleDOI
Credit Where Credit Is Due: Drivers of Subprime Credit
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The authors used individual credit histories to study how creditor-friendly repossession rights in auto lending affect borrowers and found that bankruptcy rates among subprime auto borrowers increase twice as much following natural disasters in states with strong creditors' rights compared to states with more borrower protection.Abstract:
We use individual credit histories to study how creditor-friendly repossession rights in auto lending affect borrowers. Results from a quasi-experimental setting show that bankruptcy rates among subprime auto borrowers increase twice as much following natural disasters in states with strong creditors’ rights compared to states with more borrower protection. Further tests show that auto repossessions increase the likelihood of bankruptcy, and reduce borrowers’ future access to both uncollateralized and collateralized credit, including home mortgage loans. Our findings suggest that creditors’ rights can have broad, negative effects on borrowers that extend beyond merely losing a collateralized asset.read more
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ReportDOI
Does Increasing Access to Formal Credit Reduce Payday Borrowing
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TL;DR: This article found that the removal of a bankruptcy flag on a credit report results in a sharp increase in access to traditional credit and raises credit scores, credit card limits, and approval rates.
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Journal ArticleDOI
The Finance-Growth Nexus: Evidence from Bank Branch Deregulation
Jith Jayaratne,Philip E. Strahan +1 more
TL;DR: This paper found that the rates of real, per capita growth in income and output increase significantly following intrastate branch reform and argued that the observed changes in growth are the result of changes in the banking system.
Journal ArticleDOI
Information Disclosure, Cognitive Biases and Payday Borrowing
TL;DR: In this paper, the authors study whether and what information can be disclosed to payday loan borrowers to lower their use of high-cost debt via a field experiment at a national chain of payday lenders.
Journal ArticleDOI
Microcredit in Theory and Practice: Using Randomized Credit Scoring for Impact Evaluation
TL;DR: It is found that microloans increase ability to cope with risk, strengthen community ties, and increase access to informal credit through channels different from those often hypothesized by its proponents.
Journal ArticleDOI
The Real Costs of Credit Access: Evidence from the Payday Lending Market*
TL;DR: In this article, the authors used geographic differences in the availability of payday loans to estimate the real effects of credit access among low-income households and found that loan access leads to increased difficulty paying mortgage, rent and utilities bills.
Journal ArticleDOI
Bankruptcy law and bank financing
TL;DR: In this paper, the authors disentangle the effects of reorganization and liquidation in bankruptcy on bank financing and firm investment, and highlight the importance of identifying the distinct effects of liquidation and reorganization, as these procedures differently address the tension between the continuation of viable businesses and the preservation of repayment incentives.
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