Debt collection agencies and the supply of consumer credit
No 15-23, Working Papers from Federal Reserve Bank of Philadelphia
Supersedes Working Paper 13-38/R. The activities of third-party debt collectors affect millions of borrowers. However, relatively little is known about their impact on consumer credit. To study this issue, I investigate whether state debt collection laws affect the ability of third-party debt collectors to recover delinquent debts and if this, in turn, affects the amount of credit being provided. This paper constructs, from state statutes and session laws, a state-level index of debt collection restrictions and uses changes in this index over time to estimate the impact of debt collection laws on revolving credit. Stricter debt collection regulations appear to reduce the number of third-party debt collectors and to lower recovery rates on delinquent credit card loans. This, in turn, leads to fewer openings of credit cards.
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)
New Economics Papers: this item is included in nep-ban and nep-law
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Working Paper: Debt collection agencies and the supply of consumer credit (2015)
Working Paper: Debt Collection Agencies and the Supply of Consumer Credit (2012)
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