Description

Using household survey data I estimate a model of consumer loan access, lender choice and default behavior. Households are sorted into different lenders, with higher income and education being associated with bank lending. Families with no demand for debt have low unemployment and wage risk. Also, debt amounts are quadratic in age and increase with unemployment risk, wage volatility and household size, which may be motivated by consumption smoothing of life-cycle and income shocks. Default behavior decreases with income and increases with higher indebtedness, health shocks, unemployment and wage risk, confirming there is imperfect screening of individual risk.