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Credit constraints in the market for consumer durables: evidence from micro data on car loans

Attanasio, O.; Goldberg, P.K.; Kyriazidou, E.; (2008) Credit constraints in the market for consumer durables: evidence from micro data on car loans. International Economic Review , 49 (2) pp. 401-436. 10.1111/j.1468-2354.2008.00485.x. Green open access

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Abstract

We investigate the significance of borrowing constraints in the market for consumer loans. Using data from the Consumer Expenditure Survey on auto loan contracts we estimate the elasticities of loan demand with respect to interest rate and maturity. We find that, with the exception of high income households, consumers are very responsive to maturity and less responsive to interest rate changes. Both elasticities vary with household income, with the maturity elasticity decreasing and the interest rate elasticity increasing with income. We argue that these results are consistent with the presence of binding credit constraints in the auto loan market.

Type: Article
Title: Credit constraints in the market for consumer durables: evidence from micro data on car loans
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/j.1468-2354.2008.00485.x
Publisher version: http://dx.doi.org/10.1111/j.1468-2354.2008.00485.x
Language: English
Additional information: This is a preprint of an article accepted for publication in International Economic Review © 2009 the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. http://eprints.ucl.ac.uk/15197/
Keywords: D12, G21, L92
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/15199
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