Borrowing Decisions of Credit Constrained Consumers and The Role of Financial Literacy

Swarnankur Chatterjee

Economics Bulletin, 2013, vol. 33, issue 1, 179-191

Abstract: This study uses a new nationally representative dataset (National Financial Capability Study, 2009) to examine the association between individuals' financial literacy and their high-cost borrowing decisions. The results indicate that financial literacy is indeed negatively associated with high-cost borrowing behaviors. Other factors such as lower levels of income, gender, educational attainment, and the recent downturn in economic fortune of a household were also associated with high-cost borrowing behaviors. This study's findings have important policy implications for improving individual financial decision-making of credit constrained consumers.

Keywords: Financial Literacy; Credit; Household Economics (search for similar items in EconPapers)
JEL-codes: D0 D1 (search for similar items in EconPapers)
Date: 2013-01-21
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Citations: View citations in EconPapers (7)

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