Household finance studies is a relatively recent field, exploring a growing understanding of how households make financial decisions relating to the functions of consumption, payment, risk management, borrowing and investing; how institutions provide goods and services to satisfy these financial functions of households; and how interventions by firms, governments and other parties affect the provision of financial services. This timely book analyses existing findings about household behavior as well as findings related to policy interventions. With international case studies, this book reviews a topic of global importance and brings a crucial up-to-date survey of the field for researchers and postgraduate students.
We study credit card rewards as an ideal laboratory to quantify redistribution between consumers in retail financial markets. Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers. To probe the underlying mechanisms, we exploit bank-initiated account limit increases at the card level and show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers also follow a sub-optimal balance-matching heuristic when repaying their credit cards, incurring higher costs. Banks incentivize the use of reward cards by offering lower interest rates than on comparable cards without rewards. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.
Have you ever fallen victim to the system? Felt humiliated and helpless? Have you fought back? Meet four such patriots: Varun, an NRI software engineer; Salman, CEO of Coffee Moments; Raghav, a virtuous politician; and Aditya, an altruistic businessman. Fate brings these four lives together at a crossroads, pushing these unlikely heroes out of their comfort zones to fight a seemingly unstoppable evil force which wants to hold our country captive. The four companions, who have always had each other's back, will now come face-to-face with the biggest challenge of their lives-a labyrinthine plot rife with perilous twists and wicked turns. With the nation's future at stake, will they be able to destroy the Chakravyuh intricately laid down by the enemies of India? Will they come out of it alive? A story about friendship, faith and courage, replete with romance and patriotism, The Four Patriots is a racy, contemporary thriller sure to give you goosebumps. Pick this book if you do not believe 'is desh ka kuch nahin ho sakta'; and if you think all is not lost, this is a must-read!
We examine the impact of a large-scale microcredit expansion program on financial access and the transition of previously unbanked borrowers to commercial banks. Using administrative micro-data covering the universe of loans to individuals from a developing country, we show that the program significantly increased access to credit, particularly in less developed areas. This effect is driven by the newly set-up credit cooperatives (U-SACCOs), which grant loans to previously unbanked individuals. A sizable share of first-time borrowers who need a second loan switch to commercial banks, which cream-skim low-risk borrowers and grant them larger, cheaper, and longer-term loans. These borrowers are not riskier than similar individuals already at commercial banks and only initially receive smaller loans. Our results suggest that the microfinance sector, together with a well-functioning credit reference bureau, help mitigate information frictions in credit markets.
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