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Sixteen jurisdictions in the United States prohibit payday lending through stringent usury laws or well‐established nonprofitable 36% interest rate caps. Yet over one in 10 consumers residing in these jurisdictions borrowed payday loans in the past 5 years. This raises questions about actual policy implementation and enforcement. We employ data from the 2018 National Financial Capability Study to investigate if associations between payday lending prohibitions and payday borrowing differ by degree of enforcement. We find that nuances in degree of enforcement among restrictive states are not associated with payday borrowing likelihoods. However, these nuances appear when examining payday borrowing frequency, particularly when controlling for consumers' financial circumstances and when conditioning on alternative financial services consumers. We consistently note the highest borrowing behaviors for states sans regulation. Policymakers may consider strengthening enforcement in cases where the primary goal is preventing or reducing payday borrowing. [ABSTRACT FROM AUTHOR]

This paper investigates the growth of new forms of personal finance used in purchasing motor vehicles – a development which it characterises as 'financialisation'. It focusses on the case of the rise of the personal contract purchase (PCP) in the United Kingdom market, and seeks to account for its growing popularity, and potential implications. It is found that the rise of PCPs is best understood as a form of financial innovation designed to help car manufacturers overcome long-term profit realisation problems produced by market saturation in mature markets. The way PCPs are structured lowers consumers' monthly finance payments, allowing them to access to higher value vehicles, and encourages more frequent purchases of new vehicles, all of which allows greater manufacturer profit realisation. However, it does so in a way which increases financial risk, to consumers, car manufacturers, and financial investors. On the other hand, manufacturers' risk exposure is limited by how the consumers' car dependency lowers expected default rates. PCPs threaten financial stability, as well as sustaining social and environmentally unsustainable consumption practices. [ABSTRACT FROM AUTHOR]

Research background: People who take non-banking loans are primarily perceived as excluded from accessing bank services. The growth of e-commerce and the increasing digitalisation of customer interactions with banks was particularly accelerated by the COVID-19 pandemic (the first 'black swan'). These processes have also influenced the rapid growth of the LendTech (LT) sector within FinTech with its digital loans and buy-now-pay-later (BNPL) services. The war in Ukraine (the second 'black swan') has led to an energy crisis, increased inflation, interest rates and credit costs, and reduced credit accessibility. In this context, the following research questions are addressed: Are the LT and banking sectors complementary or substitutive in the area of consumer financing? Does complementarity apply to all customer segments and loan amounts? How does the extent of complementarity or substitutability of the LT sector depend on, and to what extent do changes in the regulatory and macroeconomic environment affect, the interaction between the banking and LT sectors? Purpose of the article: The aim of the article is to identify trends in the LT sector within FinTech in the context of assessing the scale and determinants of current and future complementarity of the non-bank sector and the banking sector in the area of consumer credit in time of black swans. An additional purpose of the article is to estimate revenues from the basic operating activities of companies from the on-line channel. Methods: The research process was multi-stage and the research procedure was structured. Due to the lack of a uniform source of data on LT products and services, the study used many data sources -- data from the Credit Information Bureau, a primary nationwide survey on LT users a primary survey of people representing LT's managerial staff. The selection of LTs was carried out according to the concept of the monetary sampling unit. The Horvitz-Thompson estimator with Sen-Yates-Grundy variance form was used to estimate net operating income for LT from the online channel in 2021. Findings & value added: The LT companies surveyed state that black swans (the COVID-19 pandemic and the war in Ukraine) and the current macroeconomic situation have not significantly affected demand for non-banking loans. The reduction in the opportunities for the LT sector as a result of anti-usury regulations will only lead to a shift in consumer demand to the pawnshop sector and the shadow economy, which will be detrimental to consumers. Complementarity between LT and the banking sector is revealed especially in crisis situations, thus limiting the effects of market shock (limited supply of loans offered by banks). In periods of stabilisation, a rather clear division of preferences is noticeable - in the case of seniors and loans for higher amounts, banks dominate, while in the case of lower amounts and in younger age groups, non-bank institutions are more popular. The mechanism by which shrinking banking services are replaced by LT in short-term crises confirms the importance of LT in balancing the Consumer Finance market in the face of unstable periods. From a medium- and long-term perspective, it should be noted that inflation and rising interest rates will increase the scale of credit exclusion in commercial banks, shifting part of the demand to the non-bank sector. These phenomena have an international dimension. Similar observations were made already in 2012 by the CFPB in the USA and the British FTA, when analysing the consumer finance market immediately after the subprime crisis, emphasising the effects of limiting access to bank consumer loans and the resulting growth of the LT market (Gębski, 2013). [ABSTRACT FROM AUTHOR]

This study used financial socialization theory to examine the direct and indirect association between financial socialization (from parents, peers, and teachers) and financial well-being (FWB) via financial self-efficacy (FSE). Data were collected from Pakistan in early 2020. Our data analysis using the partial least square structural equation modeling approach revealed surprising results. We found that an association between financial socialization from peers and FWB does not exist both directly and indirectly via FSE. Furthermore, the results showed that the association of financial socialization from parents and teachers with FWB is completely mediated by FSE. Other results indicated partial mediation of FSE in the association between early childhood consumer experience and FWB. Our findings imply that learning from others' financial experiences builds young consumers' confidence in dealing with financial matters, which, in turn, helps improve their FWB. We suggest policymakers to consider these findings in designing policies related to the young consumers of developing nations. [ABSTRACT FROM AUTHOR]

Financial coaching, a hands-on financial wellness approach, has emerged as a go-to strategy to help clients establish and reach their personal financial goals. We analyzed the borrowing and repayment behavior of 1,790 clients who received financial coaching through a program sponsored by the state of Delaware. Relative to a matched comparison group, financial coaching clients cure 0.24 more delinquent accounts, reduce credit card utilization by 5 percentage points, reduce the number of debts in collections by an additional 0.37 accounts, and have $422 less in credit card debt. Findings also show a 7 percentage point increase in the share of clients with a credit card and a 6 percentage point increase in the share of clients with a student loan. We do not see consistent differences in personal installment loans or mortgage holding. These estimates provide evidence that financial coaching can provide benefits for clients while being provided on a state-wide scale, illustrating the potential of public–private programs to provide services. [ABSTRACT FROM AUTHOR]

Bridging the gap between theory and practice, this study yielded a reliable and valid measure for responsible financial behaviors with the potential to serve practitioners when working with consumers. This research utilized Bandura's Triadic Model of Causation (Bandura, 1985) to investigate and predict responsible financial behaviors. Data from the 2009, 2012, and 2018 National Financial Capability Study surveys were used to construct a responsible financial behaviors index with five subconstructs for time horizon, money management, risk management, debt awareness, and ownership of baseline financial accounts. Results from a series of regression models identified consistent relationships between the index and variables categorized as cognitive factors (financial knowledge, financial self-efficacy, and financial risk tolerance) and background characteristics (educational attainment, income, and marital status). [ABSTRACT FROM AUTHOR]

Although budgeting is widely considered a common method of managing household finances, surprisingly little is known about the budgeting process. Using a nationally-representative survey (N=3,826) of US adults, we examine budgeting behaviors and beliefs, including who budgets and why, how individuals categorize consumption, and how they adjust their behavior after over- or under-spending. We identify five facts that illuminate key features of budgeting and supplement findings with administrative data (N=194,678) from a large financial institution in Australia. Understanding systematic patterns in how individuals and households budget can serve a critical role in informing economic models of consumption-savings behavior. [ABSTRACT FROM AUTHOR]

Payment frequency is a fundamental yet underexplored feature of consumers' finances. As higher payment frequencies are becoming more prevalent, consumers are receiving more frequent yet smaller paychecks. An analysis of income and expenditure data of over 30,000 consumers from a financial services provider demonstrates a naturally occurring relationship between higher payment frequencies and increased spending. A series of lab studies support this finding, providing causal evidence that higher (vs. lower) payment frequencies increase spending. The effect of payment frequency on spending is driven by changes in consumers' subjective wealth perceptions. Specifically, higher payment frequencies reduce consumers' uncertainty in predicting whether they will have enough resources throughout a period, increasing their subjective wealth perceptions. As such, situational factors that reduce prediction uncertainty for those paid less frequently (e.g. the timing of consumers' expenses, income levels) moderate the impact of payment frequency. The effects of payment frequency on subjective wealth and spending can occur even when objective wealth favors those with lower payment frequencies. More broadly, the current work underscores a need to understand how timing variations in consumers' income impact their perceptions, behaviors, and general well-being. [ABSTRACT FROM AUTHOR]

Using a nationwide online survey capturing detailed information on the backgrounds and practices of 654 financial planners, this study examines the associations between the use of technologies by financial planners and self-reported time spent within various stages of the six-step financial planning process. Surprisingly, in many cases, use of technology is associated with an increase rather than a decrease in time spent within various stages of the financial planning process. These results suggest that although technologies may provide efficiencies in completing certain tasks, these efficiencies do not necessarily result in net reductions in time spent within the financial planning process. [ABSTRACT FROM AUTHOR]

Spending is influenced by many factors. One that has received little attention is the meaning that people give to the act of spending. Spending money might imply that someone is relatively wealthy—since they have money to spend—or relatively poor—since spending can deplete assets. We show that people differ in the extent to which they believe that spending implies wealth (SIW beliefs). We develop a scale to measure these beliefs and find that people who more strongly believe that SIW spend their own money relatively lavishly and are, on average, more financially vulnerable. We find correlational evidence for these relationships using objective financial-transaction data, including over 2 million transaction records from the bank accounts of over 2,000 users of a money management app, as well as self-reported financial well-being. We also find experimental evidence by manipulating SIW beliefs and observing causal effects on spending intentions. These results show how underlying beliefs about the link between spending and wealth play a role in consumption decisions, and point to beliefs about the meaning of spending as a fruitful direction for further research. [ABSTRACT FROM AUTHOR]

Using a multidisciplinary approach, this article explores the evolution of the Japanese consumer credit market in parallel with the rise in household debt. It analyses the institutional environment, labour market changes and the transformation of borrowers' motives, with a focus on the growth of the small loan market driven by the sarakin from the 1960s to the 2000s. It also examines the forces driving regulatory change by considering the tensions between stakeholders (government, banks, sarakin, borrowers) and their conflicts of interest, leading in fine to the revision of the Moneylenders Law in 2006. The revision of this law represents a major institutional change for the Japanese consumer credit market in general, and the personal loan sector in particular, with the fall of the sarakin. [ABSTRACT FROM AUTHOR]

Economic geographers have deployed a variety of spatial categories (e.g., scale, territory and border) to describe and theorize the spatiality of market making and marketization processes. This article supplements these accounts with insights from the work of post-structural geographers oriented toward the site. To this end, the article introduces the notion of the marketsite. Marketsites are points where heterogeneous elements are brought together and assembled in an effort to realize the conditions required for the performance of model markets and market subjectivities. Using the example of smart disclosure, the article argues that the use of disclosure labels to improve consumer decision making has transformed the point of sale and other transactional junctures into incipient marketsites—niches where various behavioral techniques are deployed to summon into being subjects who behave as if they were Homines economici. The behavioral turn in economics has focused the market-making efforts of a variety of actors on the market subject and strategic sites in people’s everyday lives where they can be guided and nudged into alignment with market models. Together such marketsites delineate a new, and largely uncharted, geography of encounter between (behavioral) economic theory and actually existing markets. Drawing on fieldwork developing and testing a fee disclosure box for a prepaid debit card, I show that the production of marketsites, where Homo economicus can survive, is a messy process that rarely succeeds. Regardless, such efforts reveal valuable insights into how the behavioral turn in economics is reshaping the spatiality of market-making processes. [ABSTRACT FROM AUTHOR]

The availability of retail financial services in low-to-moderate income (LMI) neighborhoods remains a controversial topic, with significant underexplored questions about the potential presence of alternative financial service providers (AFSPs) and the absence of banks and credit unions (BCUs). In LMI neighborhoods across the United States, consumers regularly utilize AFSPs, including payday lenders, for basic financial transactions and services. This article addresses the geographic relationship between retail financial services locations, neighborhood- level demographic variables, and mortgage lending activity in three U.S. metropolitan study areas: Las Vegas, Nevada; Los Angeles, California; and Miami, Florida. The neighborhood-level predictors of the presence of both AFSPs and BCUs are examined at the Census-tract level using Ordinary Least Squares (OLS) and simultaneous autoregressive (SAR) statistical models. The results reveal that sociodemographic variables, including median household income and race/ethnicity, have a significant predictive relationship on AFSP location, even when controlling for spatial clustering. [ABSTRACT FROM AUTHOR]

We assert, in this article, that the joint transformation of public perception about households’ over-indebtedness and financial deregulation had important implications on the government decision to reform overall consumer credit between 2005 and 2010. On the one hand, the development of collective actions by groups of lawyers to defend borrowers from moneylenders’ abusive practices represents a source of change in the public opinion about over-indebted individuals in the context of long economic stagnation. A systematic press article analysis from 1977 to 2006 shows that the rising number of these collective actions since the early 1990s may have gradually increased the political salience of social issues related to the unsecure loan market. On the other hand, financial deregulation has been a source of change by allowing banks to enter the consumer finance market since the early 2000s. Banks entry into this market transformed the logic of complementarity among traditional consumer credit actors (Shinpan, credit card companies andsarakin) in a general context of legal consumers’ protection reinforcement. Thus, evolution of Japanese consumer finance's regulation is particularly relevant to illustrate the forces of institutional change and its consequences. [ABSTRACT FROM PUBLISHER]

Financial education is an important area of study due in part to the need for improved understanding of how to navigate an ever more complex financial decision-making environment, thus the need for effective classroom instruction. The purpose of this study is to examine a "teacher-as-learner" professional development program that is rooted in both professional development and adult education fields of study as means of providing financial education. This program educates teachers on their own personal finance, ultimately better preparing educators to teach financial literacy education. Results showed significant improvements in self-reported financial behaviors between pre- and posttests. Results suggest using contextual learning for teacher professional development because it benefits personal finances and successful teaching practices. [ABSTRACT FROM AUTHOR]

Using a laboratory experiment, we study how retirement plan members choose investment options using five information items prescribed by regulators. We found that asset allocation information for pre-mixed investment options – normally presented as a pie chart or a table – had the largest impact on choices. Participants preferred investment options with more, and more evenly weighted, asset class allocations. This novel application of a 1/ n strategy differs significantly from the existing findings of naïve diversification in ‘mix-it-yourself’ conditions where participants spread resources evenly across funds or categories. When asset allocation information was included, coefficients on return and risk information had unexpected signs, but when asset allocation was omitted, participants preferred options with high Sharpe ratios. We also demonstrate that none of the five prescribed information items was significant in explaining individual choices of more than 35% of participants. These findings highlight that information contained in prescribed investment disclosures might not be used in the manner intended by the regulator. The results raise important methodological questions about the way ‘user-friendly’ information prescribed by regulators is validated before being legislated. [ABSTRACT FROM AUTHOR]

Age-related deterioration in cognitive ability may compromise the ability of older adults to make major financial decisions. We explore whether knowledge and expertise accumulated from past decisions can offset cognitive decline to maintain decision quality over the life span. Using a unique dataset that combines measures of cognitive ability (fluid intelligence) and of general and domain-specific knowledge (crystallized intelligence), credit report data, and other measures of decision quality, we show that domain-specific knowledge and expertise provide an alternative route for sound financial decisions. That is, cognitive aging does not spell doom for financial decision-making in domains where the decision maker has developed expertise. These results have important implications for public policy and for the design of effective interventions and decision aids. [ABSTRACT FROM AUTHOR]

Credit scores are the most widely used instruments to assess whether or not a person is a financial risk. Credit scoring has been so successful that it has expanded beyond lending and into our everyday lives, even to inform how insurers evaluate our health. The pervasive application of credit scoring has outpaced knowledge about why credit scores are such useful indicators of individual behavior. Here we test if the same factors that lead to poor credit scores also lead to poor health. Following the Dunedin (New Zealand) Longitudinal Study cohort of 1,037 study members, we examined the association between credit scores and cardiovascular disease risk and the underlying factors that account for this association. We find that credit scores are negatively correlated with cardiovascular disease risk. Variation in household income was not sufficient to account for this association. Rather, individual differences in human capital factors-educational attainment, cognitive ability, and self-control-predicted both credit scores and cardiovascular disease risk and accounted for ∼45% of the correlation between credit scores and cardiovascular disease risk. Tracing human capital factors back to their childhood antecedents revealed that the characteristic attitudes, behaviors, and competencies children develop in their first decade of life account for a significant portion (∼22%) of the link between credit scores and cardiovascular disease risk at midlife. We discuss the implications of these findings for policy debates about data privacy, financial literacy, and early childhood interventions. [ABSTRACT FROM AUTHOR]

Both household consumption and savings behavior are increasingly influenced by fairness concerns. Although justice research has repeatedly investigated consumers' ethical consumption, research on laypeople's (i.e., non-experts') ethical investment behavior has received far less attention. Across four studies, we find that-on average-people are willing to accept lower interest rates for an increased ethicality of their financial investments, which suggests that fairness concerns are taken into account when making investment decisions. We find that investments with higher fairness must yield an overall lower return to be preferred over a secure fixed-income fund compared to more immoral investments (Study 1). Furthermore, laypeople prefer fairer funds in direct comparison (Study 2), an effect that cannot be solely attributed to people's general tendency to underestimate dynamic interest rate effects (Study 3). Finally, we explored the potential psychological processes that could underlie this average preference for moral investments and find that harm/care and fairness moral foundations moderate the effect (Study 4). We find that perceptions of fairness mediate the link, but perceptions of risk do not. The results provide consistent support for fairness concerns in laypeople's financial decision making, similar to what has been found in ethical consumption. [ABSTRACT FROM AUTHOR]

Categorical variables regarding credit cards can be relatable to some demographical characteristics of consumers. Consumers who are in some demographical characteristics are mostly in some categories while some others arefewer in those categories. Therefore, it is possible to find out which consumers have a tendency what kind of things regarding credit cards. Survey data have been collected from 514 credit card holder public servants in Bilecik central district and only categorical variables have been evaluated in this study. Totally, 138 hypotheses were tested by Pearson chi-square analysis. Some demographical variables like age, gender, marital status have been found related to many categorical variables regarding credit cards. It's observed that other relations have been found between the variables regarding both credit cards and consumers' loan taking habits, and many other categorical variables. Especially for significantly related variables, consumers have been found that they had more tendency to be inside some categories mostly. [ABSTRACT FROM AUTHOR]

Unprecedented levels of US subprime mortgage defaults precipitated a severe global financial crisis in late 2008, plunging much of the industrialized world into a deep recession. However, the fundamental reasons for why US mortgages defaulted at such spectacular rates remain largely unknown. This paper presents empirical evidence showing that the ability to perform basic mathematical calculations is negatively associated with the propensity to default on one's mortgage. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out loans in 2006 and 2007, and match them to objective, detailed administrative data on mortgage characteristics and payment histories. The relationship between numerical ability and mortgage default is robust to controlling for a broad set of sociodemographic variables, and is not driven by other aspects of cognitive ability. We find no support for the hypothesis that numerical ability impacts mortgage outcomes through the choice of the mortgage contract. Rather, our results suggest that individuals with limited numerical ability default on their mortgage due to behavior unrelated to the initial choice of their mortgage. [ABSTRACT FROM AUTHOR]

This paper is an evaluation of the common macro-economic, micro-economic, and social factors affecting households' financial situations. Moreover, the author's objective was to develop a fuzzy logic model for forecasting fluctuations in the number of nonperforming consumer loans in a country using the example of Poland. This study represents one of the first attempts in the global literature to develop such a forecasting model based on macro-economic factors. The findings confirm the usefulness of the proposed innovative approach to forecasting the volume of household insolvencies in a country. [ABSTRACT FROM AUTHOR]