Contract Terms, Employment Shocks, and Default in Credit Cards.
Regulatory concerns over a tension between expanding financial access and limiting default have led to significant restrictions on contract terms in a number of countries, despite limited evidence on their effectiveness. We use a large nation-wide RCT to examine new borrower responses to changes in...
| Publicado en: | Review of Economic Studies Vol. 93; no. 4; pp. 2451 - 2490 |
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| Autores principales: | , , , , |
| Formato: | Artículo |
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Oxford University Press / USA
Jul2026
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=195161446&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 195161446 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00346527 REM jtl: Review of Economic Studies issn: 00346527 maglogo: N pubinfo: dt: Jul2026 vid: 93 iid: 4 pid: 622 pub: Oxford University Press / USA artinfo: ui: 195161446 10.1093/restud/rdaf079 ppf: 2451 ppct: 39 formats: tig: atl: Contract Terms, Employment Shocks, and Default in Credit Cards. aug: au: Castellanos, Sara G Jiménez-Hernández, Diego Mahajan, Aprajit Prous, Eduardo Alcaraz Seira, Enrique affil: Banco de México, México Federal Reserve Bank of Chicago, USA Department of Agricultural & Resource Economics, UC Berkeley and NBER, USA Instituto Mexicano del Seguro Social, México Department of Economics, University of Notre Dame and JPAL, USA su: Mexico Unemployment Contracts Randomized controlled trials Default (Finance) Interest rates Credit cards Financial inclusion sug: subj: Unemployment Contracts Randomized controlled trials Mexico All Other Plastics Product Manufacturing Credit Card Issuing Default (Finance) Interest rates Credit cards Financial inclusion keyword: copyrightHolder:Review of Economic Studies Ltd copyrightYear:2026 Credit default inLanguage:en Job loss Minimum payment Moral hazard Negative life events publisher:Oxford University Press Regulation sameAs:https://dx.doi.org/10.1093/restud/rdaf079 copyrightHolder:Review of Economic Studies Ltd copyrightYear:2026 Credit default inLanguage:en Job loss Minimum payment Moral hazard Negative life events publisher:Oxford University Press Regulation sameAs:https://dx.doi.org/10.1093/restud/rdaf079 ab: Regulatory concerns over a tension between expanding financial access and limiting default have led to significant restrictions on contract terms in a number of countries, despite limited evidence on their effectiveness. We use a large nation-wide RCT to examine new borrower responses to changes in interest rates and minimum payments for a credit card that accounted for 15% of all first-time formal loans in Mexico. Default rates were 19% over the 26 month experiment and a 30 pp decrease in interest rates decreased default by 2.5 pp with no effects on the newest borrowers. Doubling minimum payments increased default by 0.8 pp during the experiment but reduced it by 1 pp afterwards, possibly by reducing debt. Matching the experimental sample to their formal employment histories we find that the effect of job separation—more common among new borrowers—on default is seven times larger than the effect of the 30 pp interest rate change. We provide a simple framework for interpreting the experimental results, and rationalize the smaller contract term effects by their limited effects on cash flow rather than by differences in per-peso impacts. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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