1、 1 中文 5640 字 外文翻译 The Determinants of Consumer Credit:A Review of the Literature Material Source: Consumer Credit in Europe Author: Daniela Vandone 1 Introduction The literature of consumer credit is sizeable. Such a body of work reflects notonly the composite nature of unsecured debt, but also the
2、fact that differentmethodological approaches exist depending on the research questions under analysis and the objectives sought.Four main approaches can be seen: a management approach, which focuses on the characteristics of the credit industry, its workings and the policies adopted by supply-side p
3、layers； a legal approach, which investigates the impact the regulatory framework has on competition and consumer protection； a socio-psychological approach, which analyses how individuals are affected by consumption behaviour and indebtedness choices； an economic approach, which for the most part co
4、ncentrates on the determinants of the demand for and supply of consumer credit and on an analysis of the characteristics of individuals and households in debt. In this chapter we will discuss the economic approach with the aim of providing an outline of the individual and institutional factors that
5、are considered in the literature as determinants of consumer credit.The economic models referred to are based on the economic rationality of individuals, who seek to increase living standards by smoothing consumption over different periods of their lives through saving and borrowing decisions. Accor
6、ding to these models, consumer credit demand and supply is determined by individual factors. 2 The Life-Cycle and Permanent Income Theories The theoretical economic framework for consumption, saving and indebtedness decisions is developed within the Life-Cycle theory, developed by Modigliani and Bru
7、mberg in 1954, and the Permanent Income Hypothesis, proposed by Friedman in 2 19571. The central idea of these intertemporal consumption choice models is that households make their consumption choices (and consequently those relating to saving and indebtedness) on the basis of their wealth, current
8、disposable income and future income expectations so as to guarantee a uniform level of consumption over their lifetimes. The underlying assumption of these models is that income is generally low in an individuals early working life and tends to rise towards retirement. Individuals at the start of th
9、eir working life, expecting higher future income receipts, finance the purchase of assets in order to raise consumption over the level offered by current income. Nearing the end of their working lives, inversely, individuals raise savings levels in preparation for retirement when spending will be gr
10、eater than earnings. Within this framework, saving and indebtedness guarantee heightened economic welfare by smoothing out consumption over time. In the standard theory,named as such by Modigliani himself, the economic model posits that choices regarding households consumption levels over different
11、periods of their life are subject to an intertemporal budget constraint.Considerable further empirical analyses of the theory have stressed the need for the standard model to take into account two additional aspects： Households demand for debt is subject to factors other than income and wealth； hous
12、eholds may be liquidity constrained. Encompassing these aspects effectively implies the model should address variables that influence both the demand and supply sides of the credit market (Table 1.1). Table 1.1 Consumer credit demand and supply factors CREDIT DEMAND INDIVIDUAL FACTORS CREDIT SUPPLY
13、Socio-demographic Age Education Size and composition of family . Economic Income Wealth 1 Although the two theories use different economic models, both envisage similar consumption behaviour patterns. For the purposes of this work, therefore, the names of both will be considered as equivalents. 3 Un
14、certainty . INSTITUTIONAL FACTORS Efficiency of justice system Information-sharing Informal credit markets . 2.1 Credit Demand Factors With regards to individual factors, empirical analysis has extended the standard model by examining to what extent socio-demographic variables, such as the age of th
15、e head of the household, the size and make up of the family, and levels of education, influence individuals spending, saving and borrowing choices.2 Consistent with the life-cycle, young people, characterised by expectations of rising income receipts, have a strong demand for credit which, over time
16、, drops because income is sufficient to cover spending and with age individuals become more adverse to indebtedness.Indebtedness is higher or the capacity to save is lower also in the case of large families with children at pre-school or school age when in this life-cycle phase spending is typically
17、 high. This being said, however, the presence of children may also be an incentive for greater saving in order to satisfy inter-generational asset transfer.Education also has a positive effect on the demand for credit both because it reflects a probable rise in future income and greater job security
18、 and reduces the costs of entering the credit market thanks to an enhanced capacity to make informed decisions regarding indebtedness.In addition to the economic variables already included in the original framework, i.e. individuals income and wealth, empirical analysis has extended the model to inc
19、lude also uncertainty about the amount and variability of future income. Such uncertainty determines the need to retain liquidity as a precaution against income falls or unexpected increases in liabilities, with a subsequent increase in saving and a reduction in the demand for credit. Turning to ins
20、titutional factors, the literature identifies three in particular: the extent of information-sharing amongst financial institutions regarding the level of borrowers credit risk, the efficiency of the justice system in taking steps against 2 The term household refers in the literature both to an individual and a family with personal loan commitments. For this reason when reference is made in this work to household unsecured debt the terms individual and family are considered as synonyms.
