Review of Financial Studies Vol. 36 No. 1 2022
What Determines Consumer Financial Distress? Place- and Person-Based Factors
Abstract
We use credit report data to study consumer financial distress in America. We report large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy.
- DOI
- 10.1093/rfs/hhac025
- Volume
- 36
- Issue
- 1
- Pages
- 42-69
- Language
- en
- Sources
- bibtex:phds-export.bib openalex openalex crossref