Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/18594
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dc.contributor.authorPathania, Vikram-
dc.date.accessioned2016-09-26T12:05:15Z-
dc.date.available2016-09-26T12:05:15Z-
dc.date.copyright2016-09-14-
dc.date.issued2016-09-14-
dc.identifier.urihttp://hdl.handle.net/11718/18594-
dc.descriptionThe R & P seminar held at Wing 11 Committee Room, IIM Ahmedabad on September 14, 2016 by Dr. Vikram Pathania, University of Sussex on "High-Cost Debt and Borrower Reputation: Evidence from the U.K".en_US
dc.description.abstractWhen taking up high-cost debt signals poor credit risk to lenders, consumers must trade off alleviating credit constraints today with exacerbating them in the future. We document this trade-off by exploiting the random assignment of applicants to loan officers with different propensities to approve otherwise identical loans by a high cost lender in the U.K. For the average applicant, taking up a high-cost loan has a large, immediate, and permanent impact on the credit score. Take-up also leads to more default and credit rationing by standard lenders. In contrast, borrowers whose credit score is not affected by take-up — because they already have low credit scores at the time of application — are no more likely to default and experience no further credit rationing. Thus, high cost credit has a negative impact on future financial health when it affects borrower reputation, but not otherwise. The evidence suggests that high-cost borrowing may leave a self-reinforcing stigma of poor credit risk.en_US
dc.language.isoenen_US
dc.publisherIndian Institute of Management, Ahmedabaden_US
dc.subjectHigh-Cost Debten_US
dc.subjectBorrower Reputationen_US
dc.subjectevidence suggestsen_US
dc.subjectcredit scoreen_US
dc.titleHigh-Cost Debt and Borrower Reputation: Evidence from the U.Ken_US
dc.typeVideoen_US
Appears in Collections:R & P Seminar

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