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Bounds on repayment behavior: evidence for the consumer credit market

Mario Padula and Charles Grant ()
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Charles Grant: Department of Economics, University of Reading

No 2007_26, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: How does the punishment for default affect repayment behavior? We use administrative data, provided by the leading Italian lender of unsecured credit to the household sector, to analyze households repayment behavior. Administrative data are particularly well suited to study what factors are responsible for default, but raise a fundamental econometric problem, since they identify the determinants of repayment behavior only for those who are granted credit. To overcome this problem, we provide upper and lower bounds on the determinants of repayment behavior. Moreover, we show how to use the restrictions from the theory to narrow the bounds.

Keywords: Manski Bounds; Consumer Credit; Default (search for similar items in EconPapers)
JEL-codes: D14 K42 O17 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2007
New Economics Papers: this item is included in nep-ban, nep-law and nep-mfd
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