Co-holding behaviour: unlocking the puzzle

Piotr Bialowolski, Andrzej Cwynar and Dorota Weziak-Bialowolska

Applied Economics Letters, 2022, vol. 29, issue 4, 333-337

Abstract: This article seeks to explain why households decide to simultaneously hold both credit and savings products. Beyond the arguments of ignorance or behavioural biases commonly used in the literature, our analysis demonstrates that co-holders might be rationally seeking lower interest rates on their consumer credit products. Our analysis reveals that additional savings accumulated before credit uptake, even if not used as a down payment for a debt, reduce the interest rate on credit.

Date: 2022
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DOI: 10.1080/13504851.2020.1866742

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