The Availability and Utilization of 401(k) Loans

John Leonard Beshears, James Choi, David Laibson and Brigitte Madrian

Scholarly Articles from Harvard Kennedy School of Government

Abstract: We document the loan provisions in 401(k) savings plans and how participants use 401(k) loans. Although only about 22% of savings plan participants who are allowed to borrow from their 401(k) have such a loan at any given point in time, almost half had used a 401(k) loan over a longer, seven-year horizon. The probability of having a loan follows a hump-shaped pattern with respect to age, job tenure, account balance, and salary, but conditional on having a loan, loan size as a fraction of 401(k) balances declines with respect to these variables. Participants are less likely to use loans in plans that charge a higher interest rate, and loans are smaller when plans allow fewer simultaneously outstanding loans, impose a shorter maximum possible loan duration, or charge a lower interest rate.

Date: 2011
New Economics Papers: this item is included in nep-ban and nep-lab
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Published in HKS Faculty Research Working Paper Series

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http://dash.harvard.edu/bitstream/handle/1/5027953/RWP11-023_Madrian_alia.pdf (application/pdf)

Related works:
Chapter: The Availability and Utilization of 401(k) Loans (2011)
Working Paper: The Availability and Utilization of 401(k) Loans (2011)
Working Paper: The Availability and Utilization of 401(k) Loans (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:hksfac:5027953

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