Debt collection agencies and the supply of consumer credit

Viktar Fedaseyeu

Journal of Financial Economics, 2020, vol. 138, issue 1, 193-221

Abstract: This paper finds that stricter laws regulating third-party debt collection reduce the number of third-party debt collectors, lower the recovery rates on delinquent credit card loans, and lead to a modest decrease in the openings of new revolving lines of credit. Further, stricter third-party debt collection laws are associated with fewer consumer lawsuits against third-party debt collectors but not with a reduction in the overall number of consumer complaints. Overall, stricter third-party debt collection laws appear to restrict access to new revolving credit but have an ambiguous effect on the nonpecuniary costs that the debt collection process imposes on borrowers.

Keywords: Household finance; Consumer credit; Creditor rights; Contract enforcement; Debt collection; Law and finance (search for similar items in EconPapers)
JEL-codes: D12 D18 G18 G20 K35 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:138:y:2020:i:1:p:193-221

DOI: 10.1016/j.jfineco.2020.05.002

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