Journal article
Modeling the Revolving Revolution: The Debt Collection Channel
The American economic review, v 107(3), pp 897-930
01 Mar 2017
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We investigate the role of information technology (IT) in the collection of delinquent consumer debt. We argue that the widespread adoption of IT by the debt collection industry in the 1990s contributed to the observed expansion of unsecured risky lending such as credit cards. Our model stresses the importance of delinquency and private information about borrower solvency. The prevalence of delinquency implies that the costs of debt collection must be borne by lenders to sustain incentives to repay debt. IT mitigates informational asymmetries, allowing lenders to concentrate collection efforts on delinquent borrowers who are more likely to repay.
Metrics
Details
- Title
- Modeling the Revolving Revolution: The Debt Collection Channel
- Creators
- Lukasz A. Drozd - Federal Reserve Bank of PhiladelphiaRicardo Serrano-Padial - Drexel U
- Publication Details
- The American economic review, v 107(3), pp 897-930
- Publisher
- Amer Economic Assoc
- Number of pages
- 34
- Grant note
- Cynthia and Bennet Golub Endowed Faculty Scholar Award University of Wisconsin-Madison Graduate School Research Committee Award Vanguard Research Fellowship from Rodney L. White Center for Financial Research
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000395782300008
- Scopus ID
- 2-s2.0-85017361945
- Other Identifier
- 991019168079004721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Economics