Yin, Xiao;
(2026)
Learning in the Limit: Income Inference from Credit Extensions.
Journal of Finance
(In press).
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Abstract
Combining a randomized controlled trial with administrative and survey data, this paper shows that credit limit extensions significantly increase total spending and income expectations. By controlling for changes in personal income expectations, the spending response to credit-limit extensions weakens by approximately 30%. For financially unconstrained consumers, expectation changes account for around two-thirds of the spending responses to limit extensions. These findings are consistent with consumers inferring future income from credit supply.
| Type: | Article |
|---|---|
| Title: | Learning in the Limit: Income Inference from Credit Extensions |
| Publisher version: | https://onlinelibrary.wiley.com/journal/15406261 |
| Language: | English |
| Additional information: | This version is the author-accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| Keywords: | Consumption, MPB, Credit Supply, Field Experiments, Income Expectations. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10218991 |
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