Replication data for: Information Asymmetries in Consumer Credit Markets: Evidence from Payday Lending

Principal Investigator(s):  View help for Principal Investigator(s) Will Dobbie; Paige Marta Skiba

Version:  View help for Version V1

Name File Type Size Last Modified
ReadMe.pdf application/pdf 40.3 KB 12/07/2019 09:03:AM
f1_rd_firststage.do text/plain 5.5 KB 12/07/2019 09:03:AM
f2_rk_firststage.do text/plain 1.4 KB 12/07/2019 09:03:AM
f3_rd_reducedform.do text/plain 5.5 KB 12/07/2019 09:03:AM
f4_rk_reducedform.do text/plain 1.4 KB 12/07/2019 09:03:AM
t1_summarystats.do text/plain 1.3 KB 12/07/2019 09:03:AM
t2_rd_firststage.do text/plain 1.5 KB 12/07/2019 09:03:AM
t3_rk_firststage.do text/plain 1.4 KB 12/07/2019 09:03:AM
t4_rd_mainresults.do text/plain 1.5 KB 12/07/2019 09:03:AM
t5_rk_mainresults.do text/plain 1.4 KB 12/07/2019 09:03:AM

Project Description

Summary:  View help for Summary Information asymmetries are prominent in theory but difficult to estimate. This paper exploits discontinuities in loan eligibility to test for moral hazard and adverse selection in the payday loan market. Regression discontinuity and regression kink approaches suggest that payday borrowers are less likely to default on larger loans. A $50 larger payday loan leads to a 17 to 33 percent drop in the probability of default. Conversely, there is economically and statistically significant adverse selection into larger payday loans when loan eligibility is held constant. Payday borrowers who choose a $50 larger loan are 16 to 47 percent more likely to default.

Scope of Project

JEL Classification:  View help for JEL Classification
      D14 Household Saving; Personal Finance
      D82 Asymmetric and Private Information; Mechanism Design
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages


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Published Versions

V1 [2019-12-07]

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