What Determines Consumer Financial Distress? Place- and Person-Based Factors

Benjamin Keys, Neale Mahoney and Hanbin Yang

No 26808, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use credit report data to study consumer financial distress in America. We show there are large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy.

JEL-codes: G5 G51 K35 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-fle, nep-law and nep-ure
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Published as Benjamin J Keys & Neale Mahoney & Hanbin Yang & Tarun Ramadorai, 2022. "What Determines Consumer Financial Distress? Place- and Person-Based Factors," The Review of Financial Studies, vol 36(1), pages 42-69.

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Working Paper: What Determines Consumer Financial Distress? Place- and Person-Based Factors (2020)
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