Journal of Political Economy Vol. 125 No. 5 2017
Precommitments for Financial Self-Control? Micro Evidence from the 2003 Korean Credit Crisis
Abstract
We analyze high-frequency micro panel data on customers of a major Korean credit card company before and after the 2003 Korean credit crisis and find evidence of pervasive precommitment behavior that is difficult to explain using standard economic theories: (1) customers voluntarily reduce their credit card borrowing limits without any compensation, (2) customers turn down interest-free installment loan offers with high probability, and (3) of the small fraction of customers who do accept interest-free loan offers, most precommit to pay off the loan over a shorter term than the maximum allowed term under the offer.
- DOI
- 10.1086/693037
- Volume
- 125
- Issue
- 5
- Pages
- 1413-1464
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref