Title

Credit Crunched: The Relationship Between Credit Denials and Use ofAlternative Financial Institutions

Authors

Jeffery Dew, Utah State UniversityFollow

Document Type

Conference Paper

Journal/Book Title/Conference

Credit Crunched: The Relationship Between Credit Denials and Use ofAlternative Financial Institutions

Publication Date

2008

Abstract

Because consumer credit markets may tighten as a result of the 2008 economic downturn, this study examined the relationship between being denied credit and having a loan with alternative financial institutions. Using data drawn from the 2004 Survey of Consumer Finances (SCF), multivariate analyses showed that participants who had been denied credit in the past 5 years were twice as likely to have a loan with an alternative financial institution as individuals who had not been denied credit in the recent past. These differences remained even after using propensity score matching to attempt to mitigate differences between those who had been denied credit and those who had not been denied. Consequently, if consumer markets do indeed tighten some consumers may be pushed out of the traditional credit market (e.g., banks, credit unions), and into the non-traditional credit market (e.g., payday lenders).

Comments

Paper presented at the annual conference of the American Council on Consumer Interests. Orlando, FL

Recommended Citation

Dew, J. P. (July 2008). Credit crunched: The relationship between credit denials and use of alternative financial institutions. Paper presented at the annual conference of the American Council on Consumer Interests. Orlando, FL