Consumer credit Research Papers - Academia.edu (original) (raw)

Credit scoring has become a very important task in the credit industry and its use has increased at a phenomenal speed through the mass issue of credit cards since the 1960s. This paper compares the performance of current classifiers against an artificial intelligence technique based on the natural immune system, named simple artificial immune system (SAIS). Experiments were performed on three benchmark credit datasets and SAIS was found to be a very competitive classifier.

- by Kevin Leung
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- Credit Scoring, Artificial Immune System, Artificial Intelligent, Consumer credit

Media Release 13 October 2015. The Australian Centre for Financial Studies (ACFS) has today released a report on the ‘payday lending’ market in Australia. The report, written by Dr Marcus Banks, Dr Ashton de Silva and Professor Roslyn... more

- by Marcus Banks and +1
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- Consumer credit, Alternative Financial Services

Rad proučava uređenje materije potrošačkog kreditiranja u hrvatskom pravu i analizira osnovna prava korisnika kredita sukladno Direktivi 2008/48/EZ o ugovorima o potrošačkom kreditu i Direktivi 2014/17/EU o ugovorima o potrošačkim kreditima koji se odnose na stambene nekretnine. Također se osvrće na aktualne probleme u domaćoj sudskoj praksi i daje prikaz stajališta Suda EU o tumačenjima navedenih EU Direktiva.

- by Emilia Miscenic
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- Consumer Protection (Law), Consumer credit, Banking and Finance

In this paper we explore the association between debt and psychological well-being amongst heads of households using the British Household Panel Survey. Our principle finding is that those household heads who have outstanding (non-mortgage) credit, and who have higher amounts of such debt, are significantly less likely to report complete psychological well-being. The average increase in the psychological distress is greater when outstanding credit is measured at the individual, as opposed to household, level. No such significant association is found in the case of mortgage debt. Our results highlight the psychological cost associated with the consumer credit culture in Britain.

Appropriate finance can greatly increase the speed and lower the cost of incremental housing e the process used by much of the low/moderate-income majority of most developing countries to acquire shelter. Informal finance continues to dominate the funding of incremental housing. However, new sources have developed including housing microfinance, community-based finance savings and loan groups, and consumer credit for building materials. This paper examines informal and formal finance for incremental housing and makes recommendations for the vast expansion necessary to meet the affordable housing demand from the huge urban wave in developing countries projected over the next three decades.

This paper examines broadly the doctrine of unconscionability and analyzes to what extent business as well as consumer contracts in Malaysia do not preclude the possibility of unconscionability and unethical bargains. The commercial or business to business contracts look into the relationship in agency and franchising while the consumer contracts specifically relate to the sales of goods, consumer credit as well as sales and purchase of housing. These commercial and consumer contracts are commonly adhesion in nature and are getting more complex in the modern world. This paper would also suggest the statutory requirement of conscionable conduct in all its variation in both the formation as well as performance of commercial and consumer contracts generally. The variation of conscionable conduct refers to conducts that are fair and made in good faith or without undue influence, gross inequality or presumed dishonesty.

- by Zahira Ishan
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- Consumer credit, Business to Business
- by Attila Gyorgy
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- Foreign Direct Investment, European Union, Retail Banking, Literature Review

Devising Consumption explores the vital role played by the
financial service industries in enabling the poor to consume
over the last hundred and fifty years. Spending requires
means, but these industries also offered practical marketing
devices that captured, captivated and enticed poor
consumers. The role of these devices has been poorly
understood both in the social sciences and in business
studies and marketing. The book advances the case for a more
pragmatic understanding of how ordinary, dull, everyday
consumption is arranged, and offers an alternative to
orthodox approaches.

- by Angela ROMAN
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- Foreign Direct Investment, European Union, Retail Banking, Literature Review

This chapter introduces a phenomenon I call 'digital subprime'. This is a domain that represents a rapidly developing frontier in lenders' quest for predictive power involving a growing group of well-funded technology startups who are entering subprime, payday lending markets in various different countries and are lending at high rates of interest to borrowers who often have either poor credit histories or, in some cases, no credit histories at all. In this new variant of consumer credit lending, we see the exploitation of diverse forms of online data, processed through forms of algorithmic analysis, in the attempt to better predict the repayment behaviour of individuals. This data often appears extremely mundane and to have very little to do with the credit product in hand. Data points can range from a user's IP (Internet Protocol) address, to the particular browser they use, to their screen resolution, to information accessed via social media accounts. In examining this new economic phenomenon, the paper presents results from a project that uses digital methods to try to track the trackers being deployed. The chapter seeks to map the terrain of possibility represented by the diverse forms of data that are rendered accessible to lenders, partly as a basis for future research, and partly to highlight key developments in the present and future ontologies of money.

- by Joe Deville
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- Credit Scoring, Financialization, Big Data, Consumer credit

The article deals with credit agreements linked to purchase contracts. The main question arising from «buying on credit» is that credit and purchase are individual contracts, but they form an «economic unit». Within these operations, which involve three parties [buyer, seller and lender], such complexity emerges, at a statutory level, only when the buyer is a consumer, namely a person who buys goods or services for their own use (art. 121 of Decree 385/1993, Law of Banking). In case of non-fulfilment by the supplier, if the consumer exercises the right to terminate the purchase, the connected contract of credit could be also cancelled as well, under art. 125-quinquies of Decree 385/ 1993. When a professional buys on credit, entering into a leasing contract, in case of non-fulfilment by the supplier, termination rights on credit shall be
regarded relying on general principles of private law. In this respect, the lessee can’t enforce his right to cancel also the credit contract invoking the interdependence, in the absence of a specific term. The Article aims at challenging the case law that follows such an approach, suggesting the adhesion to a more objective perspective, focused on the function of the contracts involved in the operation, irrespective of the status of the buyer.

- by Francesca Bartolini
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- Contract Law, Consumer Protection (Law), Law of Contracts, Consumer credit
- by iain Ramsay
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- Consumer credit, Banruptcy and Insolvency Law

Consumer credit risk assessment involves the use of risk assessment tools to manage a borrower’s account from the time of pre-screening a potential application through to the management of the account during its life and possible write-off. The riskiness of lending to a credit applicant is usually estimated using a logistic regression model though researchers have considered many other types of classifier and whilst preliminary evidence suggest support vector machines seem to be the most accurate, data quality issues may prevent these laboratory based results from being achieved in practice. The training of a classifier on a sample of accepted applicants rather than on a sample representative of the applicant population seems not to result in bias though it does result in difficulties in setting the cut off. Profit scoring is a promising line of research and the Basel 2 accord has had profound implications for the way in which credit applicants are assessed and bank policies adopted.

- by Lyn Thomas
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- Finance, Support Vector Machines, Bias, Risk assessment
- by Ronnie Phillips
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- Great Depression, Financial Services, United States, Joint and Several Liability
- by Chirlesan Dan
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- Foreign Direct Investment, European Union, Retail Banking, Literature Review

This paper discusses the use of dynamic modelling in consumer credit risk assessment. It surveys the approaches and objectives of behavioural scoring, customer scoring and profit scoring. It then investigates how Markov chain stochastic processes can be used to model the dynamics of the delinquency status and behavioural scores of consumers. It discusses the use of segmentation, mover-stayer models and the use of second and third order models to improve the fit of such models. The alternative survival analysis proportional hazards approach to estimating when default occurs is considered. Comparisons are made between the ways credit risk is modelled in consumer lending and corporate lending.

- by William Scherer
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- Applied Mathematics, Stochastic Process, Risk assessment, Profitability

lı yıllar, tasfiye yıllarıydı. Dünya genelinde 1980 öncesinden kalan sosyal devlet uygulamalarının, kalkınmacı çabaların, sendikal hakların, devlet müdahalesinin ve bedelsiz sağlanan kamu hizmetlerinin tasfiye edildiği yıllar. Postmodernizmin büyülü teorileri ve küreselleşmenin tılsımlı çekiciliği etrafında şekillenen atmosferde SSCB yıkılmış, işçi sınıfına "elveda" denmiş ve "tarihin sonunun geldiği" ilan edilmişti. Liberaller, sermaye hareketlerinin serbestleştirilmesi, özelleştirmeler, piyasa yönelimli reformlar, devletin ekonomiden elini çekmesi ve sendikaların gücünün kırılması sonucunda piyasaların işleyişi önündeki engellerin yıkılacağı ve bunun toplumlar için refah ve demokrasi getireceğini savunuyordu. Her ne kadar 1990'ların sonunda ve 2000'lerin başında irili ufaklı ekonomik krizler yaşansa da bunların mekanı Asya, Rusya, Arjantin ya da Türkiye olduğu için, bu krizlerin kökeninin yerel siyasetçilerin beceriksizliği ya da yanlış politika uygulamaları olduğuna inanıldı. Ancak 2008'e gelindiğinde, sistemin kalbinde patlak veren ekonomik kriz hızla küresel bir ölçeğe büründü ve 1980'li yıllarda başlayan tasfiye süreci 21. yüzyılın ilk büyük krizi ile duvara tosladı. Otuz yılı aşkın süredir yaşadığımız bu serbest piyasa deneyi sonucunda geride kalan, refah ve demokrasi umutlarından çok, yeni bir varoluş biçimi olarak "borçlandırılmış insanın" üretilmesiydi.

- by Umit Akcay
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- Finance, Political Economy, Modern Turkey, Financialization

The article undertakes a comprehensive analysis of different facets of the gold loan business as it operates at the everyday level in Andhra Pradesh. It highlights various business practices, business culture, risks and impact of the gold loan business. We proffer that the rise of gold loan business in Andhra Pradesh is concurrent to the exit of the Microfinance institutions (MFIs) in AP after the crisis in 2010. The business raises similar issues that led to the MFI crisis which include issues related to transparency, consumer protection and information asymmetry. In the paper it is argued that due to complacency, companies often overlook the risks. Though gold loans are perceived as a ‘risk free’ business, we argue that the profile of borrowers, the elastic business practices, the underlying volatility of the commodity and the fact that gold is an asset that does not generate any income makes the business as risky as any other business that entails lending money. The essence of the business is one that is a corporatized version of pawn broking whose profitability is dependent on geographic expansion rather than improving margins.

- by S Ananth
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- Finance, Economic Sociology, Financial Inclusion, Money Lending

We model aggregate delinquency behaviour for consumer credit (including credit card loans and other consumer loans) and for residential real estate loans using data up until 2008. We test for cointegrating relationships and then estimate short run error correction models. We find evidence to support the portfolio explanations of declines in credit quality for consumer and for real estate loans, but support for the reduced stigma explanation was restricted to real estate loans. Evidence supportive of household-level explanations of irrational borrowing and unexpected net income shocks was found for consumer and real estate loans, but evidence of strategic default was restricted to the volume of consumer loans and real estate loans, and not for credit cards. We also found that the error correction model gave forecasts of the volume of delinquent consumer debt which were of an accuracy comparable to that of an ARIMA model.

- by John Banasik and +1
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- Marketing, Real Estate, Finance, Econometrics
- by Richard Disney and +1
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- Consumer credit

All monetary objects – credit cards as much as bank notes and coins – are material things that can be considered as ‘economic devices’. The success of the particular transactional object depends on the security and predictability of its relations with a diverse and complex range of associated actors, both human and non-human. Yet monetary devices themselves can shape the course of economic action. This chapter focuses on objects at the ‘frontline’ of many forms of consumer credit enabled economic exchange: the plastic cards that smooth so many people’s passages through consumer spaces are a recognizable part of our everyday lives. It argues that not enough attention has been paid to how monetary mediums might be important in shaping social and economic life. It focuses on historical emergence of the plastic card in the United States, showing the way in which plastic and its specific socio-material affordances have, in different and changing ways, mattered in the history of the payment card and in creditors’ engagements with users, including playing a key role in accelerating the first major credit card boom. The chapter then moves to the United Kingdom, exploring the role of the card not in moments of borrowing, but at times of default – that is, when consumer credit borrowers, for whatever reason, are unable (or unwilling) to meet their obligations to repay. In these situations, as the chapter shows, the cards themselves can become the targets of micropolitical forms of protest, directing attention towards what usually goes unremarked: that the accumulation of billions of dollars of consumer credit debt not only depends on, but has been stimulated by, the accumulation in so many everyday lives of millions of superficially unremarkable plastic cards.

- by Joe Deville
- •
- Monetary history, Materiality (Anthropology), Money, Credit Card Default Problems

Over the last two decades, many large banks have developed advanced quantitative credit risk models for allocating economic capital, measuring risk-adjusted returns at the businessline and individual credit level, and improving overall risk management. The advent of these new models and their incorporation into bank credit risk management were an important impetus for the effort to reform the Basel Committee's standards for regulatory capitalV Basel IIVand, in turn, the Basel II proposal is encouraging banks to upgrade their credit risk management approaches. 1 Under the Basel II proposal, banks with sufficiently sophisticated risk measurement and management systems can use their own internal systems to estimate key risk parameters that determine regulatory capital minimums.

- by Stijn Claessens
- •
- Credit Risk, Financial Services, Basel II, Consumer credit

We use a new panel dataset of credit card accounts to analyze how consumers responded to the 2001 Federal income tax rebates. We estimate the monthly response of credit card payments, spending, and debt, exploiting the unique, randomized timing of the rebate disbursement. We find that, on average, consumers initially saved some of the rebate, by increasing their credit card payments and thereby paying down debt. But soon afterwards their spending increased, counter to the canonical Permanent-Income model. Spending rose most for consumers who were initially most likely to be liquidity constrained, whereas debt declined most (so saving rose most) for unconstrained consumers. More generally, the results suggest that there can be important dynamics in consumers' response to "lumpy" increases in income like tax rebates, working in part through balance sheet (liquidity) mechanisms.

- by Sumit Agarwal
- •
- Economics, Political Economy, Consumption, Consumer Behavior

Consumer is the person who signs good and service contracts with non-commercial purposes. Contracts signed retail customers with banks represents an important part in consumer transactions recent years. Therefore, a number of legal arrangements were concluded. The purposes of arrangements are to place a legal basis for consumer credit transactions signed between banks and customers. Customers have been forced to further awareness against banks due to constant increase in the consumer loan. Otherwise, consumers will be increasingly faced with victimization. The aim of this study is to demonstrate recent developments in financial consumer rights in Turkey. In this context, it was evaluated the impact of Law No. 6502 and the Consumer Loan Contracts Directive in terms of relationships amid financial consumer and bank. The regulations are in line with world practice and it have strengthened the rights of clients against banks in general. Besides, it isn't clearly

- by Ismail Kaban
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- Banking, Consumer Protection (Law), Consumer credit, Consumer Credit Law

The first step in any kind of research is to select the most adequate research methodology. There are a lot of research methodologies to chose from when one wants to engage in research regarding the development of financial performance models. Because of this abundance, there is a need to present the most important ones. In this paper I describe the

- by Adrian Costea
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- European Union, Retail Banking, Literature Review, Monetary Policy
- by Therese Wilson
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- Law, Applied Economics, Consumer Policy, Regulatory reform

Existing accounts of consumer credit market making have done much to explore the business models, technologies and advertising practices of lenders, and the financial circumstances of borrowers. However, the space of interface between consumer credit debtor and debt collector remains underexplored. Drawing on interviews with debtors and an exposition of debt collections technologies, the paper demonstrates how this market domain, in seeking to prompt calculative engagement, depends on its ability to intersect successfully with the everyday lives of economic agents. Critically engaging with key currents emerging out of the ‘economization’ programme it builds on its attention to the socio-material mechanisms of market making. However, the paper argues that materially sensitive economic sociologies need to account more thoroughly for the place of affect in markets. This is particularly relevant when studying consumer markets, where exchanges routinely centre on intimate and embodied encounters between economic actors.

- by Joe Deville
- •
- Sociology Of Markets, Computer Networks, Consumption Studies, Affect Theory

The Building Better Cities Program (BBC), initiated during the term of the Hawke Labor Government and administered by the then Department of Housing and Regional Development (DHRD), can be cr edited with leading the revival of Australian inner cities, the most significant change in urban Australia since the introduction of consumer credit post World War II. The genesis of the Building Better Cities Program was a Special Premier's Conference held in July 1991 at which the Commonwealth, State and Territory Governments agreed to co-operate in a program focused on impr oving urban development processes and the quality of urban life. Its aims were to demonstrate better urban planning and service delivery as well as co-ordination within and between the various levels of government. The Program was first funded in the 1991-92 Commonwealth Budget. The overall purpose of the Program was 'to promote improvements in the efficiency, equity and sustainability of Australian cities and t...

- by Lyndsay Neilson
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- Economic Growth, Urban Planning, Social Justice, Regional development

The authors empirically study how the underlying riskiness of the pool of home equity line of credit originations is affected over the credit cycle. Drawing from the largest existing database of U.S. home equity lines of credit, they use county-level aggregates of these loans to estimate panel regressions on the characteristics of the borrowers and their loans, and competing risk

- by Paul Calem
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- Adverse Selection, Working Papers, Empirical Study, Consumer credit

Purpose -The purpose of this article is to develop a theoretical explanation -financial numeracyfor consumer proficiency with financial services. With sufficient financial numeracy, consumers benefit fully from financial services and make competent choices in regard to financial management. Design/methodology/approach -The article builds theory by combining consumer cognitive capacity and customer knowledge theories with findings from prior studies of consumer difficulties with financial services to introduce a comprehensive model of the antecedents and consequences of financial numeracy with testable propositions for many psychographic and cultural influences and moderators.

- by Bruce Huhmann
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- Marketing, Credit Scoring, Financial management, Information Processing
- by Joe Deville
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- Credit Scoring, Big Data, Credit Risk Management, Consumer credit

This article seeks to gain insight into the influence of sample bias in a consumer credit scoring model. Considering the vital implications on revenues and costs concerned with the issuing and repayment of commercial credit, predictive performance of the model is crucial, and sample bias has been suggested to pose a sizeable threat to profitability due to its implications on either population drainage or biased estimates. Whereas in previous research, different techniques of reducing sample bias have been proposed and deployed, the debate around the impact of sample bias itself has predominantly been held on a theoretical level. The dataset that was used in this study, however, provides the opportunity to investigate the issue in an empirical setting. Based on the data of a mail-order company offering short term consumer credit to their consumers, we show that (i) given a certain sample size, sample bias has a significant effect on consumer credit-scoring performance and profitability, (ii) its effect is composed of the inclusion of rejected orders in the scoring model, and the inclusion of these orders into the variable-selection process, (iii) the impact of the effect of sample bias on consumer credit scoring performance and profitability is limited and (iv) in consumer credit scoring, by merely increasing the sample size of the biased sample, the impact of sample bias can likely be reduced. Hence, we conclude that the possible impact of any reduction of sample bias is modest in a consumer credit scoring model, and that attention might optimally be focused on other factors leading to improved consumer credit scoring.

- by Dirk Van Den Poel
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- Information Systems, Marketing, Computer Science, Information Technology

This article examines the growing use of alternative data and machine learning to assess consumer creditworthiness-a trend described as 'algorithmic credit scoring'-and the implications of this trend for the regulation of consumer credit markets in the UK. It frames the analysis of algorithmic credit scoring in terms of three, core regulatory norms: allocative efficiency, distributional fairness, and consumer autonomy (privacy). Examining the normative trade-offs that arise within this frame, the article argues that the existing regulatory framework governing algorithmic credit scoring does not achieve a satisfactory normative balance. In particular, the growing reliance on consumers' personal data and behavioural profiling by lenders due to algorithmic credit scoring, coupled with the ineffectiveness of individualised, rights-and market-based mechanisms under existing data protection regulation, present a significant threat to consumers' privacy and autonomy in consumer credit markets. The article concludes with a recommendation for stricter limits on the processing of (personal) data in the context of consumer lending.

- by Nikita Aggarwal
- •
- Algorithms, Artificial Intelligence, Machine Learning, Privacy

Problems arising from the consumer credit market were at the heart of the financial crisis generating the Great Recession. The housing market boom was accompanied by a rapid expansion of easy mortgage credit, and the strong period of economic growth after 2002 through 2006 was characterized by credit expansion in virtually all other forms of consumer credit: home equity loans and lines of credit, credit cards, auto loans and student loans. This expansion of mortgage and consumer credit contributed to bubble conditions in housing markets and raised household ratios of debt payment-to-income to levels that proved unsustainable. When home prices reversed direction and credit tightened, the foreclosure crisis ensued and consumers began a prolonged process of deleveraging. The combination of collapsing home prices, a severe reduction in household wealth and spending, and contraction of bank credit supply and other financing channels generated the Great Recession and the subsequent period of sluggish economic growth. As a result of this experience there has been a significant increase in consumer credit regulation. The largest banking organizations now are required to conduct annual stress testing of their ability to withstand severely adverse economic scenarios, which incorporate simulation of credit losses from mortgages, credit cards, auto loans, and other retail portfolios. Their capital planning is contingent on the outcome of these stress tests and of supplementary supervisory stress tests conducted by the Federal Reserve. In addition, consumer financial protection regulation has been strengthened and expanded, most significantly through the establishment of the Consumer Financial Protection Bureau as part of the Dodd-Frank Act in 2010.

- by Julapa Jagtiani and +1
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- Financial Regulation, Banking Supervision, Consumer credit

In the context of economic crisis and widespread household over-indebtedness, this paper examines the varying rate and extent of evolution of consumer insolvency laws in a selection of European countries, in order to identify the factors which influence the degree to which the law can respond to the conditions of the modern consumer credit society. I begin by examining the key features of the selected laws, including the newly enacted Irish Personal Insolvency Act 2012. I consider potential explanations for differences in national laws advanced by commentators and policymakers, in order to examine whether national legal traditions, relevant institutional structures and cultural attitudes can determine the shape of a country's personal insolvency law. I illustrate how empirical evidence provides little support for the idea that consumer insolvency laws are the product of such inherently national factors. Subsequently, I show how political science concepts such as political ideology, policy salience, and interest group influence appear to explain more effectively the development of these laws. Noting the politically controversial and complex nature of household debt issues, I conclude by suggesting that universal political forces, rather than inherently national factors, represent greater obstacles to reforming personal insolvency law to meet the needs of the modern consumer credit society.

- by Joseph Spooner
- •
- Consumer Bankruptcy, Consumer credit

The ‘Crowther Committee’, in their report of 1971, proposed a fundamental change in consumer credit regulation in the UK. Among many aspects, they campaigned for the calculation and publication of the true cost of lending, i.e. the annualized percentage rate (APR), of all consumer credit products. The APR was introduced to reduce information asymmetries, thus improving consumers' rights and incentivizing competition among credit grantors. This report resulted in the enactment of the Consumer Credit Act 1974 (CCA74). This paper studies the effects of the CCA74 on the British economy, through the introduction of the APR. Moreover, it tests the presence of a structural break in the relationship between the price and volume of consumer credit. Furthermore, the paper analyses the effects of shocks to consumer credit on inflation and households’ savings. This article contributes to extending the data availability for consumer credit before 1975, and to debating the understanding of th...

- by Sergio Castellanos Gamboa
- •
- Business, Economics, Household Finance, Consumer Protection

1. Sovraindebitamento, recupero della bancabilità perduta e ritorno al credito. Premesse e prospettive del controllo sul merito creditizio, anche alla luce dei nuovi obblighi di informazione finalizzati alla consulenza. – 2. Credito professionale e credito estemporaneo: le ragioni per distinguere. Diversa capacità di prevenire il default della controparte e di precostituirsi riserve (non sempre lineari) di liquidità: il caso dell’assicurazione connessa ai mutui, tra fisiologia e pratiche commerciali scorrette. – 3. Deviazioni dall’ordinario: esame di prassi contrattuali bancarie finalizzate ad accantonamenti indebiti di ricchezza nei prestiti ai consumatori e alle famiglie. Illegittimità di costi accessori e penalità per anticipata estinzione. – 4. Caricamenti impliciti al di là di un accordo scritto: sulla pretesa neutralità del piano di ammortamento allegato al contratto di finanziamento nell’identificazione della quota parte di interessi corrispettivi non maturata al momento dell’estinzione anticipata. – 5. Tecniche di ammortamento alla francese e all’italiana: la necessità di un confronto, fin dalla fase pre-contrattuale. Piano di ammortamento e «accordo» sull’imputazione dei pagamenti: quali legami e quali insidie. Necessità di un controllo sulla maturazione periodica di interessi «secondo il piano di ammortamento». – 6. Maggiori oneri inevitabilmente connessi alla metodologia francese (e maggiori costi per l’esercizio del diritto di recesso): problemi di trasparenza al cospetto dell’art. 124 t.u.b. – 7. La sostituzione automatica del tasso, secondo l’art. 125 bis t.u.b., quale rimedio alla mancata inclusione nel TAEG del reale costo del credito.

The Basel New Accord which is being implemented throughout the banking world on 1 January 2007 has made a significant difference to the use of modelling within financial organisations. In particular it has highlighted the importance of... more

- by Lyn Thomas
- •
- Mathematical Sciences, Decision Tree, Basel II, Consumer credit

The global crisis that erupted in 2007-8 clearly exposed that debt with financial institutions has become a key element of household social reproduction in most parts of the world. One way to analyse how this situation impacts on people's lives is to investigate the very nature of debt (its 'essence'), which is often conceived as intrinsically violent. However, most anthropologists consider how people manage their debt and take a situated approach to debt in context. Their focus on people's financial practices takes a broad view of consumer credit as any number of monetary debts that households incur to make ends meet. Their examination of how debt is managed within the household points up that consumer credit is often used to sustain meaningful social relations, although this can trigger a debt spiral. This spotlight on how people's financial practices relate to broader historical and social contexts shows that the rise of consumer credit is instrumental in reshaping class, racial and gender relations in their material and moral dimensions, and that people can be found to resist debt in many ways. Although these trends in the anthropological literature make for a rich understanding of debt relations, much could still be done to understand why people in most settings complain about their debts, but do not openly rebel against them.

- by Hadrien Saiag
- •
- Economic Anthropology, Financialization, Debt, Consumer credit

The proportion of US households that used a high-cost credit product, payday loans, almost doubled between 2007 and 2013. In this study, we estimated the effect of credit constraints on the likelihood of using payday loans. Based on a logistic regression of data from the 2007-2013 Survey of Consumer Finances (SCF), we found that households with credit constraints were more likely to use payday loans than were those that did not experience such constraints, and that the effect was greater after the Great Recession. Over the survey years, having an emergency expense was the most important reason given for using a payday loan, but the rate at which other reasons were given varied over time. Paying bills/loans and having no other credit options were both reasons given more frequently following the Great Recession than in 2007.

- by Kyoung Tae (KT) Kim
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- Borrowing, Household Finance, Consumer credit, Constraints

In this paper we analyse unique data on credit applications received by the leading provider of consumer credit in Italy (Findomestic). The data set covers a five year period (1995)(1996)(1997)(1998)(1999) during which the consumer credit market rapidly expanded in Italy and a new law has come into force that sets a limit to interest rates charged to consumers (the usury law). We investigate ways in which the law may have affected the consumer credit market and show how the applicants' pool has changed over time in comparison to a representative sample of the Italian population. We compute behavioural changes by controlling for changes in the observable characteristics of the Findomestic clientele and argue that, under suitable identifying assumptions, these changes can be given a structural interpretation. If the usury shock is assumed to have affected credit supply but not credit demand, that is if the usury law had a differential impact on the supply of various types of credit but a uniform impact on demand, we can identify and estimate a demand equation. Our key finding is that demand is interest rate elastic, particularly in the North, where the consumer credit market is more competitive.

- by Guglielmo Weber
- •
- Economics, Consumer credit

The role of mental accounts in consumer credit decision making was investigated. First, in a conversation-based process-tracing study, 96 adults with experience of credit were presented with minimal descriptions of three instalment credit options in realistic consumer scenarios. They chose a credit option and a repayment plan, but before doing so could request further information. When choosing the source of credit, participants usually sought and compared information on Annual Percentage Rate (APR) or total cost (TC), often using simple decision heuristics. When choosing repayment plans, they frequently asked about, and made trade-oVs between, monthly repayment amounts, TC, and loan duration. Second, in an independent groups experiment, TC and APR information were systematically varied. Participants chose from pairs of repayment plans conXicting in loan duration and monthly repayment amount (N D 28). Although APR signiWcantly inXuenced choice, its eVect was substantially moderated by TC information. It was concluded that (i) although APR is an important attribute for source of credit decisions, TC is more important for repayment plan decisions, since consumers often represent speciWc credit plans in terms of total mental accounts; and (ii) recurrent budget period accounts are used to evaluate monthly repayments and anticipate future goals and hazards.

- by Lisa Hinkley
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- Decision Making, Economic Psychology, Multidisciplinary, Information Search

Voor die 2014 Wysigingswet het artikel 129(3) en (4) van die Nasionale Kredietwet voorsiening gemaak vir verbruikers om kredietooreenkomste te herstel deur alle agterstallige bedrae asook sekere kostes te betaal. Die idee was dat die skuldafdwingingsproses onderbreek word wanneer die verbruiker aan die voorgeskrewe vereistes voldoen het. Die bestaan van hierdie maatreël is belangrik om verbruikers te beskerm teen die potensieël negatiewe gevolge van die streng afdwinging van vervroegingsbedinge in kredietooreenkomste. Ook vanuit 'n konstitusionele perspektief is hierdie meganisme 'n noodsaaklike element van ons kredietreg. Subartikel (3) het die basiese reg beskryf terwyl subartikel (4) die beperkings daarop omskryf het. Ten spyte van 'n paar onsekerhede aangaande die werking van hierdie meganisme, het regspraak en akademiese kommentaar 'n algemeen werkbare uitleg van hierdie bepalings opgelewer. Die wetgewer het dit desnieteenstaande nodig geag om die subartikels te wysig. Die doel van hierdie bydrae is om sodanige wysigings te analiseer om uit te pluis wat die stand van sake is nou dat die wysigingswet in werking getree het. Dit is belangrik om te besef dat die spesifieke wysigings wat aangebring is waarskynlik nie daarop gemik is om die substansie van hierdie meganisme te verander nie. Inteendeel, die doel was waarskynlik slegs om sekere konseptuele teenstrydighede uit die weg te ruim. Die wysigings aangebring aan subartikel is duidelik gemik * This article is based on a paper presented at How to cite: Brits 'The "reinstatement" of credit agreements: Remarks in response to the 2014 amendment of section 129(3)-(4) of the National Credit Act' 2015 De Jure 75-91 http://dx.

- by Reghard Brits
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- Consumer credit, National Credit Act 34 of 2005