dc.contributor.author | BICAKOVA, Alena | |
dc.date.accessioned | 2007-03-20T10:32:44Z | |
dc.date.available | 2007-03-20T10:32:44Z | |
dc.date.issued | 2007 | |
dc.identifier.issn | 1725-6704 | |
dc.identifier.uri | https://hdl.handle.net/1814/6745 | |
dc.description.abstract | Default rates on instalment loans vary with type of the good purchased.
Using an Italian dataset of instalment loans between 1995-1999, we first
show that the variation persists even after controlling for contract and
individual-specific characteristics, and for the potential selection bias
due to credit rationing. We explore whether the residual variation in
the default rates across the different types of goods is due to unobserved
individual heterogeneity (selection effect) or due to the effect of the
specific characteristics of the good (good effect). We claim that the
two effects may be interpreted as adverse selection and moral hazard.
We exploit the data on multiple contracts per individual to disentangle
the two effects, and find that most of the variation is explained by the
selection effect. Individuals who buy motorcycles on credit are more
likely to default on any loan, while those buying kitchen appliances,
furniture and computers are more likely to repay, compared to average.
We conclude that there is asymmetric information in the consumer
credit market, mostly in the form of adverse selection. | en |
dc.format.extent | 472889 bytes | |
dc.format.mimetype | application/pdf | |
dc.language.iso | en | en |
dc.publisher | European University Institute | |
dc.relation.ispartofseries | EUI ECO | en |
dc.relation.ispartofseries | 2007/02 | en |
dc.rights | info:eu-repo/semantics/openAccess | |
dc.subject | Consumer Credit | en |
dc.subject | Default | en |
dc.subject | Adverse Selection | en |
dc.subject | Moral Hazard | en |
dc.subject | D12 | en |
dc.subject | D14 | en |
dc.subject | D82 | en |
dc.title | Does the Good Matter? Evidence on Moral Hazard and Adverse Selection from Consumer Credit Market | en |
dc.type | Working Paper | en |
dc.neeo.contributor | BICAKOVA|Alena|aut| | |
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