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Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19

Jason Allen, Robert Clark (), Shaoteng Li and Nicolas Vincent

Staff Working Papers from Bank of Canada

Abstract: This paper analyzes the effectiveness of debt-relief programs targeting short-run household liquidity constraints implemented in Canada in response to the COVID-19 pandemic. These programs allowed individuals to push off mortgage and credit card payments and cut in half interest rates on credit card debt. Using credit bureau data, we document that, despite potential savings above $4 billion, enrollment was limited: 24% for mortgages and 7% for credit cards. By exploiting the richness of our data set, we provide evidence that close to 80% of individuals were unaware of the credit card relief program while others faced important fixed non-monetary costs preventing uptake.

Keywords: Credit and credit aggregates; Coronavirus disease (COVID-19); Debt management (search for similar items in EconPapers)
JEL-codes: G31 H5 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2021-03
New Economics Papers: this item is included in nep-ban
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