Consumer Credit: Evidence from Italian Micro Data

Guglielmo Weber, Stefan Hochguertel and Rob Alessie

No 3071, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this Paper we analyse unique data on credit applications received by the leading provider of consumer credit in Italy (Findomestic). The data set covers a five year period (1995-99) during which the consumer credit market rapidly expanded in Italy and a new law came into force that set a limit to interest rates charged to consumers (the usury law). We investigate ways in which the law may have affected the consumer credit market and show how the applicants? pool has changed over time in comparison to a representative sample of the Italian population. We compute behavioural changes by controlling for changes in the observable characteristics of the Findomestic clientele and argue that, under suitable identifying assumptions, these changes can be given a structural interpretation. If the usury shock is assumed to have affected credit supply but not credit demand, that is if the usury law had a differential impact on the supply of various types of credit but a uniform impact on demand , we can identify and estimate a demand equation. Our key finding is that demand is interest rate elastic, particularly in the North, where the consumer credit market is more competitive.

Keywords: Consumer credit; Choice-based sample; Usury (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2001-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Journal Article: Consumer Credit: Evidence From Italian Micro Data (2005)
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