消费信贷的决定因素【外文翻译】

外文翻译

原文

The Determinants of Consumer Credit Material Source: Source: Consumer Credit in Europe—Risks and opportunities of a Damnic Industryy

Author:Daniela Vandone

1 Introduction

The literature of consumer credit is sizeable. Such a body of work reflects not only the composite nature of unsecured debt, but also the fact that different methodological approaches exist depending on the research questions under analysis and the objectives sought.

Four main approaches can be seen: a management approach, which focuses on the characteristics of the credit industry, its workings and the policies adopted by supply-side players; a legal approach, which investigates the impact the regulatory framework has on competition and consumer protection; a socio-psychological approach, which analyses how individuals are affected by consumption behavior and indebtedness choices; an economic approach, which for the most part concentrates on the determinants of the demand for and supply of consumer credit and on an analysis of the characteristics of individuals and households in debt.

In this chapter we will discuss the economic approach with the aim of providing an outline of the individual and institutional factors that are considered in the literature as determinants of consumer credit, its diffusion and distribution amongst different segments of the population.

The economic models referred to are based on the economic rationality of individuals, who seek to increase living standards by smoothing consumption over different periods of their lives through saving and borrowing decisions. According to these models, consumer credit demand and supply is determined by individual factors, i.e. socio-demographic and economic factors, as well as by institutional factors, i.e. the institutional context in which borrowers and lenders are placed.

These studies, which first appeared in the second half of the twentieth century, have been flanked in recent years by work in behavioral economics, which focuses

instead on th e psychological variables that influence an individual’s behavior and which have revealed that this behavior is at odds with the rational choices posited by traditional economic models.

The analysis of the literature offered here, rather than attempting to represent an exhaustive summary of empirical estimations and economic models used by the authors of the various works cited, more modestly aims to provide a basis for specific investigations into the diffusion of consumer credit in Europe, the nature of the consumer credit industry, the causes of over-indebtedness and the most appropriate policy responses to the problem.

2 The Life-Cycle and Permanent Income Theories

The theoretical economic framework for consumption, saving and indebtedness decisions developed within the Life-Cycle theory, developed by Modigliani and Brumberg 1954, and the Permanent Income Hypothesis, proposed by Friedman in 1957.（1）

The central idea of these inter-temporal consumption choice models is that households make their consumption choices (and consequently those relating to saving and indebtedness) on the basis of their wealth, current disposable income and future income expectations so as to guarantee a uniform level of consumption over their lifetimes.

The underlying assumption of these models is that income is generally low in an individual’s early working life and tends to rise towards retirement. Individuals at the start of their working life, expecting higher future income receipts, finance the purchase of assets in order to raise consumption over the level offered by current income. Nearing the end of their working lives, inversely, individuals raise savings levels in preparation for retirement when spending will be greater than earnings. Within this framework, saving and indebtedness guarantee heightened economic welfare by smoothing out consumption over time.

In the ‘‘standard theory’’, named as such by Modigliani himself, the economic model posits that choices regarding households’ consumption levels over different periods of their life are subject to an inter-temporal budget constraint. Consequently, they may decide in a certain year to spend more than available income by running down all or part of their assets and/or by borrowing, provided that such a solution is temporary and that they die solvent.（2）

Considerable further empirical analyses of the theory have stressed the need for the standard model to take into account two additional aspects (Ando and

Modigliani 1957; Modigliani et al. 1985; Modigliani 1988; Deaton 1992; Alessie et al. 1997; Attanasio 1999):

–Households demand for debt is subject to factors other than income and wealth;

–House holds may be ‘‘liquidity constrained’’.

Encompassing these aspects effectively implies the model should address variables that influence both the demand and supply sides of the credit market (Table 1.1). These variables can be either ‘‘individual’’ or ‘‘institutional’’. Individual factors regard the characteristics of an individual and his/her household and can be classified into two classes: socio-demographic (for example, age, size and composition of the family, education) and economic (for example, employment status, work profiles, financial assets).

Institutional factors that characterize local credit markets include the justice system, the existence and quality of information-sharing mechanisms amongst

financial institutions, and the presence of informal credit circuits (borrowing from relatives and friends).

The same variables, individual and institutional, influence both credit demand and supply, albeit not always to the same extent and in the same direction.（3）

3 Empirical Findings

Empirical analyses aimed at studying the determinants of household credit markets and their coherence with Life-Cycle and Permanent Income models focus on the following areas, according to the research questions they investigate: – Participation in the credit market

– Level of borrowing

– Cross-country characteristics

– Risk of over-indebtedness

– Credit constraints

Work across these areas examines both individual and institutional variables. Analysis has typically concentrated on the demand side, though a branch of study has used economic

4 Behavioral Economics

Behavioral economics has in recent years proposed alternative theories to Life- Cycle and Permanent Income models (Brown et al. 2005; Karlsson et al. 2004; Ranyard et al. 2006; Stone and Vasquez Maury 2006; Supriya et al. 2005; Poppe 2008; Yang et al. 2007; Graham and Isaac 2002). These studies have focused on behavioral aspects that may significantly influence individuals’ decisions relating to spending, saving or indebtedness. These aspects differ from the socio-demographic and economic variables analyzed within the economic models discussed in the previous paragraphs.

The research models adopted within behavioral economics are based on empirical results and anomalies regarding consumer behavior that conflict with traditional notions of economic rationality. Several studies have in fact shown how the behavior of individuals deviates systematically from the ‘‘rational choice’’ model of standard economic theories without implying that such behavior is irrational.（8）

Individual choices are influenced by psychological factors, such as personal

taste, forecasting errors and impatience, which as a result prevent individuals from maximizing future utility (Kilborn 2005; Meier and Sprenger 2007).

Three main psychological factors are identified in the literature as inducing individuals to make non rational borrowing choices:

– Overconfidence bias

– Availability heuristic

—Hyperbolic discounting

Studies carried out within behavioral economics have also shown that individuals have little awareness of the existence and consequences these psychological mechanisms have. Indeed, individuals in financial difficulties tend to lay the blame on exogenous factors such as illness, divorce or job loss, which reduce incomes levels below those expected. Rarely do individuals recognize that the causes for their difficulties lie principally or at least also with their inability to manage money and the decisions made regarding spending and indebtedness. Furthermore, many studies have shown how deviant behavior patterns persist even when individuals are aware of the risks they face. Individuals’ incapacity to take corrective steps despite knowing of the dangers of over-indebtedness may have significant repercussion designing effective policies for the management of situations of indebtedness that are already or are at risk of becoming pathological9 (Kilborn 2005; Watson 2003; Lea et al. 1995).

5 Summary of the Determinants of the Demand for and Supply of Consumer Credit

The economic models of the Permanent Income and Life-Cycle theories continue to be used as a framework for analysis of households’ consumption, saving and indebtedness decisions (Jappelli 2005).

However, work in behavioral economics has made an important contribution in drawing attention to the role played not only by socio-demographic and economic variables, but also psychological factors as determinants of the demand for unsecured debt. It has also been shown how psychological factors have an impact on the effectiveness of policies adopted to prevent ex ante and manage ex post financial difficulties arising from over-indebtedness.

Table 1.3 provides a summary of the factors influencing the demand for and supply of consumer credit. As can be seen, the signs (+) and (—) are not always