Liquidity constraints and imperfect information in subprime lending:
We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing beha...
Gespeichert in:
| Hauptverfasser: | , , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13067 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing behavior, including sharp increases in demand during tax rebate season and a high sensitivity to minimum down payment requirements. We then explore the informational problems facing subprime lenders. We find that default rates rise significantly with loan size, providing a rationale for lenders to impose loan caps because of moral hazard. We also find that borrowers at the highest risk of default demand the largest loans, but the degree of adverse selection is mitigated substantially by effective risk-based pricing. |
| Beschreibung: | 41 S. graph. Darst. 22 cm |
Internformat
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| 520 | 8 | |a We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing behavior, including sharp increases in demand during tax rebate season and a high sensitivity to minimum down payment requirements. We then explore the informational problems facing subprime lenders. We find that default rates rise significantly with loan size, providing a rationale for lenders to impose loan caps because of moral hazard. We also find that borrowers at the highest risk of default demand the largest loans, but the degree of adverse selection is mitigated substantially by effective risk-based pricing. | |
| 700 | 1 | |a Einav, Liran |d 1970- |e Verfasser |0 (DE-588)130571709 |4 aut | |
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Datensatz im Suchindex
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| id | DE-604.BV023592979 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-016908309 |
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| physical | 41 S. graph. Darst. 22 cm |
| publishDate | 2007 |
| publishDateSearch | 2007 |
| publishDateSort | 2007 |
| publisher | National Bureau of Economic Research |
| record_format | marc |
| series2 | Working paper series / National Bureau of Economic Research |
| spelling | Adams, William Verfasser (DE-588)132985306 aut Liquidity constraints and imperfect information in subprime lending William Adams ; Liran Einav ; Jonathan Levin Cambridge, Mass. National Bureau of Economic Research 2007 41 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13067 We present new evidence on consumer liquidity constraints and the credit market conditions that might give rise to them. Our analysis is based on unique data from a large auto sales company that serves the subprime market. We first document the role of short-term liquidity in driving purchasing behavior, including sharp increases in demand during tax rebate season and a high sensitivity to minimum down payment requirements. We then explore the informational problems facing subprime lenders. We find that default rates rise significantly with loan size, providing a rationale for lenders to impose loan caps because of moral hazard. We also find that borrowers at the highest risk of default demand the largest loans, but the degree of adverse selection is mitigated substantially by effective risk-based pricing. Einav, Liran 1970- Verfasser (DE-588)130571709 aut Levin, Jonathan 1972- Verfasser (DE-588)129325252 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13067 (DE-604)BV002801238 13067 http://papers.nber.org/papers/w13067.pdf kostenfrei Volltext |
| spellingShingle | Adams, William Einav, Liran 1970- Levin, Jonathan 1972- Liquidity constraints and imperfect information in subprime lending |
| title | Liquidity constraints and imperfect information in subprime lending |
| title_auth | Liquidity constraints and imperfect information in subprime lending |
| title_exact_search | Liquidity constraints and imperfect information in subprime lending |
| title_exact_search_txtP | Liquidity constraints and imperfect information in subprime lending |
| title_full | Liquidity constraints and imperfect information in subprime lending William Adams ; Liran Einav ; Jonathan Levin |
| title_fullStr | Liquidity constraints and imperfect information in subprime lending William Adams ; Liran Einav ; Jonathan Levin |
| title_full_unstemmed | Liquidity constraints and imperfect information in subprime lending William Adams ; Liran Einav ; Jonathan Levin |
| title_short | Liquidity constraints and imperfect information in subprime lending |
| title_sort | liquidity constraints and imperfect information in subprime lending |
| url | http://papers.nber.org/papers/w13067.pdf |
| volume_link | (DE-604)BV002801238 |
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