Consumer Credit with Over-optimistic Borrowers

Florian Exler, Igor Livshits, James (Jim) MacGee () and Michele Tertilt

Staff Working Papers from Bank of Canada

Abstract: I investigate the impact of contactless credit cards (CTCs) on cash use in Canada, using panel data between 2010 and 2017. I show that ignoring unobserved heterogeneity would lead to overstating the impact of CTCs on cash usage in a linear model. Using finite mixture modelling, I provide evidence of the differential impacts of CTCs on the extensive versus intensive margins of cash usage. I use a two-part model, with an exclusion restriction for better identification, to model both margins separately. I obtain that CTC use negatively influences the intensive margin of cash usage but not its extensive margin. There is no clear evidence of an S-curve pattern in the impact of CTCs on cash usage over the sample period.

Keywords: Credit and credit aggregates; Credit risk management; Financial system regulation and policies (search for similar items in EconPapers)
JEL-codes: E49 G18 K35 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2020-12
New Economics Papers: this item is included in nep-law and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.bankofcanada.ca/wp-content/uploads/2020/12/swp2020-57.pdf Full text (application/pdf)

Related works:
Working Paper: Consumer Credit with Over-Optimistic Borrowers (2021)
Working Paper: Consumer Credit With Over-Optimistic Borrowers (2020)
Working Paper: Consumer Credit with Over-Optimistic Borrowers (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:20-57

Access Statistics for this paper

More papers in Staff Working Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().