scholarly journals The Impact of Consumer Credit Access on Unemployment

2019 ◽  
Vol 86 (6) ◽  
pp. 2605-2642 ◽  
Author(s):  
Kyle F Herkenhoff
Keyword(s):  
Business Cycles ◽  
Consumer Credit ◽  
Quantitative Result ◽  
Credit Access ◽  
Access To Credit ◽  
Employment Dynamics ◽  
Cyclical Fluctuations ◽  
The Business Cycle ◽  
The Impact ◽  
Revolving Credit

Abstract Unemployed households’ access to unsecured revolving credit more than tripled over the last three decades. This article analyses how both cyclical fluctuations and trend increases in credit access impact the business cycle. The main quantitative result is that credit expansions and contractions have contributed to moderately deeper and more protracted recessions over the last 40 years. As more individuals obtained credit from 1977 to 2010, cyclical credit fluctuations affected a larger share of the population and became more important determinants of employment dynamics. Even though business cycles are more volatile, newborns strictly prefer to live in the economy with growing, but fluctuating, access to credit markets.

Albert Aftalion's Macrodynamic Theory of Endogenous Business Cycles

1997 ◽  
Vol 19 (1) ◽  
pp. 71-92 ◽  
Author(s):  
Cecile Dangel ◽  
Alain Raybaut
Keyword(s):  
Business Cycles ◽  
Scientific Community ◽  
Aggregate Demand ◽  
Cyclical Fluctuations ◽  
Endogenous Business Cycles ◽  
Careful Specification ◽  
The Law ◽  
The Business Cycle ◽  
Monetary Business Cycles ◽  
Desperate Attempt

Albert Aftalion is certainly one of the best known French economists of the first half of the twentieth century. The influence he exerted during his lifetime over the scientific community of his homeland was considerable, and he was promptly acknowledged abroad to be one of the leading theorists of the business cycle. While he is best known as one of the inventors of the acceleration principle (Haberler 1937), we will focus on Aftalion's endogenous explanation of non-monetary business cycles and, more specifically, on the theoretical framework supporting Les crises périodiques de surproduction. Though this work can be seen as a mere “(desperate) attempt” to reconcile the law of markets with general overproduction (Abraham-Frois 1987), we argue instead that Aftalion's failure to construct an equilibrium theory of aggregate overproduction can be traced back to his inadequate treatment of aggregate demand. According to him, long roundabout processes are what generate cyclical fluctuations within a setting in which commodities produced and brought to the market always find an outlet. In other words, the law of markets implies market clearing where declines in prices instead of involuntary stock-building occur in the event of a crisis. How demand behaves in such a setting requires careful specification, which is precisely what is lacking in Aftalion's model.

Legitimating the Credit Infrastructure

Debtor Nation ◽  
2011 ◽  
Author(s):  
Louis Hyman
Keyword(s):  
Personal Responsibility ◽  
Consumer Credit ◽  
People Of Color ◽  
Equal Access ◽  
Credit Access ◽  
Access To Credit ◽  
Two Generations ◽  
The 1960S ◽  
Economic Future ◽  
High Social Status

This chapter discusses credit access. By the 1960s, credit access was deemed to be unequivocally beneficial. Credit use, far from marking one as immoral or unthrifty as it might have in the 1910s, denoted high social status and personal responsibility. In the 1960s, those without credit agitated for more “fair” or “equal” access. By the end of the decade, as access to credit became a social marker of independence and prosperity, various credit activists for women and people of color demanded access to credit. As such, congress passed laws to guarantee impartial access to credit. At the same time, these laws legitimated practices that would have seemed usurious two generations earlier. By the 1970s, consumer credit—legitimated as fair through federal policy—grew to an unprecedented volume and creditors extended it to all Americans with uncertain consequences for the country's economic future.

scholarly journals An Assessment of the Access to Credit-Welfare Nexus: Evidence from Mauritania

2017 ◽  
Vol 12 (9) ◽  
pp. 77 ◽  
Author(s):  
Alessandra Amendola ◽  
Marinella Boccia ◽  
Gianluca Mele ◽  
Luca Sensini
Keyword(s):  
Rural Areas ◽  
Financial Services ◽  
Urban Areas ◽  
Credit Access ◽  
Access To Credit ◽  
Household Level ◽  
Support Strategies ◽  
Level Data ◽  
The Impact ◽  
The Relationship

This paper evaluates the impact of access to credit from banks and other financial institutions on household welfare in Mauritania. Household level data are used to evaluate the relationship between credit access, a range of household characteristics, and welfare indicators. To address the threats of potential endogeneity, an index of household isolation is used to instrument access to credit. Evidence on the validity of the exclusion restriction is provided showing that household isolation is unrelated with households and area characteristics six years prior to the measurements on which this analysis is based. Results show that households with older and more educated heads are more likely to access financial services, as are households living in urban areas. In addition, greater financial access is associated with a reduced dependence on household production and increased investment in human capital. The policy conclusions from our analysis support strategies for expanding financial infrastructures in underserved rural areas of Mauritania.

ASYMMETRY AND THE AMPLITUDE OF BUSINESS CYCLE FLUCTUATIONS: A QUANTITATIVE INVESTIGATION OF THE ROLE OF FINANCIAL FRICTIONS

2016 ◽  
Vol 22 (2) ◽  
pp. 279-306 ◽  
Author(s):  
Manoj Atolia ◽  
John Gibson ◽  
Milton Marquis
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Financial Frictions ◽  
Quantitative Investigation ◽  
Macroeconomic Volatility ◽  
Access To Credit ◽  
Business Cycle Fluctuations ◽  
Key Features ◽  
The Business Cycle

We examine the quantitative significance of financial frictions that reduce firms' access to credit in explaining asymmetric business cycles characterized by disproportionately severe downturns. Using rate spread data to calibrate the severity of these frictions, we successfully match several key features of U.S. data. Specifically, although output and consumption are relatively symmetric (with output being slightly more asymmetric), investment and hours worked display significant asymmetry over the business cycle. We also demonstrate that our financial frictions are capable of significantly amplifying adverse shocks during severe downturns. Although the data suggest that these frictions are only active occasionally, our results indicate that they are still a significant source of macroeconomic volatility over the business cycle.

scholarly journals The Impact of Consumer Credit Access on Employment, Earnings and Entrepreneurship

2016 ◽  
Author(s):  
Kyle Herkenhoff ◽  
Gordon Phillips ◽  
Ethan Cohen-Cole
Keyword(s):  
Consumer Credit ◽  
Credit Access ◽  
The Impact

Synchronisation of Regional Business Cycles of Eastern Polish Provinces with the National Cycle in the Context of Regional Economic Structures

2015 ◽  
Vol 10 (2) ◽  
pp. 157-171
Author(s):  
Rafał Warżała
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Regional Variation ◽  
Regional Economic ◽  
Business Cycle Fluctuations ◽  
Cyclical Fluctuations ◽  
Band Pass ◽  
The Business Cycle ◽  
Regional Product ◽  
Regional Perspective

The objective of the article is to determine the degree of regional variation among provinces located in so-called Eastern Poland. The criterion for such variation is the structure of the generated GDP and the course of fluctuations in business cycles related to it. The analysis of economy structures in such provinces, as well as application of band-pass filters, used for separating the course of cyclical fluctuations, enabled the evaluation of the degree of structural discrepancies and business cycle discrepancies in five examined provinces. The analysis of cycle morphology in a regional perspective confirmed significant discrepancies in the course of the business cycle fluctuations in comparison to the cycle for Poland in general. The relation between the structure of the generated regional product and its co-convergence with the reference cycle is also visible. Regions characterised by a much higher or much lower share of agriculture in the GDP show different sensitivity to business cycle changes. Furthermore, these regions of Eastern Poland which have industries with a clearly pro-export nature (Warmia and Mazury, Podlasie and Podkarpackie) retain their separate character in the course of the fluctuations of the business cycle, differing from other regions included in the examined area of the country.

Financial Inclusion and Human Development

2020 ◽  
Author(s):  
Maria Soledad Martinez Peria ◽  
Mu Yang Shin
Keyword(s):  
Human Development ◽  
Financial Services ◽  
Positive Association ◽  
Preliminary Evidence ◽  
Financial Inclusion ◽  
Full Potential ◽  
Credit Access ◽  
Access To Credit ◽  
Bank Branches ◽  
The Impact

The link between financial inclusion and human development is examined here. Using cross-country data, the behavior of variables that try to capture these concepts is examined and preliminary evidence of a positive association is offered. However, because establishing a causal relationship with macro-data is difficult, a thorough review of the literature on the impact of financial inclusion, focusing on micro-studies that can better address identification is conducted. The literature generally distinguishes between different dimensions of financial inclusion: access to credit, access to bank branches, and access to saving instruments (i.e., accounts). Despite promising results from a first wave of studies, the impact of expanding access to credit seems limited at best, with little evidence of transformative effects on human development outcomes. While there is more promising evidence on the impact of expanding access to bank branches and formal saving instruments, studies show that some interventions such as one-time account opening subsidies are unlikely to have a sizable impact on social and economic outcomes. Instead well-designed interventions catering to individuals’ specific needs in different contexts seem to be required to realize the full potential of formal financial services to enrich human lives.

scholarly journals Is Access to Agribank Credit an Effective Tool in Improving Household Income? Evidence from the Northern Mountainous Region of Vietnam

2016 ◽  
Vol 12 (8) ◽  
pp. 110
Author(s):  
Do Xuan Luan ◽  
Nguyen Thanh Vu ◽  
Kieu Thi Thu Huong ◽  
Duong Thi Thu Hang ◽  
Siegfried Bauer
Keyword(s):  
Rural Development ◽  
Rural Areas ◽  
Household Income ◽  
Poverty Reduction ◽  
Nearest Neighbor ◽  
Banking System ◽  
Credit Access ◽  
Access To Credit ◽  
The Impact ◽  
Radius Matching

<p class="a"><span lang="EN-US">Access to credit has been thought to be a key factor in rural development and poverty reduction. In Vietnam, the Vietnam Bank for Agriculture and Rural Development (Agribank) emerged from the mono-tier banking system in 1988 and performs as a profit-oriented commercial bank sustaining the development of rural areas. During the last two decades, the bank has clearly expanded its share of credit outstanding in total rural credit market volume and this process is in line with the trending development of the national economy. The aim of this study is to examine whether Agribank credit improves household income in the Northern Mountains of Vietnam, where the poor and ethnic minorities are overrepresented in the population. In order to create robust estimates, a joint consideration of all four matching algorithms (</span><span lang="EN-US">nearest-neighbor matching, radius matching, Kernel matching and stratification matching) </span><span lang="EN-US">is applied to the Propensity Score Matching. The study found that access to extension services, ethnicity, and total savings emerged as reliable predictors of credit access among household endowments. Loan volumes increase with total value of household assets. In addition, the impact of credit lies in the range increase of 14.56% to 43.78% of total income, 12.09% to 51.83% of per capita income and 43.64% to 111.60% of nonfarm income of household with credit access. The agricultural bank credit has contributed in improving household income in the Northern Mountains of Vietnam. Results in this study provide further support for the hypothesis that the remarkable progress in poverty reduction in the last two decades in Vietnam is partly attributed to the development of Agribank credit. Experiences of the Agribank in lending to rural areas could be worthwhile for intermediary financial institutions to support rural development in Vietnam.</span></p>

Does CEO compensation suppress employee wages?

2018 ◽  
Vol 17 (4) ◽  
pp. 426-452
Author(s):  
Rachel Graefe-Anderson ◽  
Unyong Pyo ◽  
Baoqi Zhu
Keyword(s):  
Business Cycles ◽  
Design Methodology ◽  
Managerial Compensation ◽  
Rent Extraction ◽  
Additional Source ◽  
Content Type ◽  
Agency Conflict ◽  
Technology Firms ◽  
The Business Cycle ◽  
The Impact

Purpose This study aims to examine the impact of CEO equity-based compensation (EBC) on employee wages. It also examines the impact of EBC on average employee wages in different industries and business cycles. Design/methodology/approach The authors use pay-performance sensitivity (PPS) to measure for CEO EBC and run OLS models with year and industry dummies. As many firms do not report labor expenses, the authors conduct the two-step analysis as in Heckman (1979) to overcome the potential selection bias. Findings The authors find that CEOs with higher EBC tend to pay their employees lower wages. They also find that such an impact is more evident in non-technology firms than in technology firms. Finally, they find that CEOs with higher PPS are more likely to depress employee wages when the business cycle shows a downturn. Originality/value No study examines the impact of EBC on employee wages directly to date. The authors add to the existing stream of literature regarding employee wages and managerial compensation. Hence, they purport that the findings support existing literature suggesting EBC contributes to, rather than alleviates, the classic agency conflict. Finally, the evidence suggests an unexplored manifestation of that agency conflict and an additional source of CEO rent extraction.

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