scholarly journals Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines

2019 ◽  
Vol 1 (1) ◽  
pp. 27-42
Author(s):  
Dean Karlan ◽  
Sendhil Mullainathan ◽  
Benjamin N. Roth
Keyword(s):  
Decision Making ◽  
Interest Rate ◽  
Consumer Protection ◽  
The Philippines ◽  
Simple Experiment ◽  
High Interest Rate ◽  
Financial Decision Making ◽  
High Interest ◽  
Intervention Treatment ◽  
Financial Decision

A debt trap occurs when someone takes on a high-interest-rate loan and is barely able to pay back the interest, and thus perpetually finds themselves in debt (often by refinancing). Studying such practices is important for understanding financial decision-making of households in dire circumstances, and also for setting appropriate consumer protection policies. We conduct a simple experiment in three sites in which we paid off high-interest moneylender debt of individuals. Most borrowers returned to debt within six weeks. One to two years after intervention, treatment individuals were borrowing at the same rate as control households. (JEL D14, D18, D91)

scholarly journals Effectiveness of high interest rate policy on exchange rates: A reexamination of the Asian financial crisis

2006 ◽  
Vol 2006 ◽  
pp. 1-9 ◽  
Author(s):  
Tim Brailsford ◽  
Jack H. W. Penm ◽  
Chin Diew Lai
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Exchange Rates ◽  
Interest Rates ◽  
Asian Financial Crisis ◽  
The Philippines ◽  
High Interest Rate ◽  
Interest Rate Policy ◽  
High Interest ◽  
Rate Policy

One of the most controversial issues in the aftermath of the Asian financial crisis has been the appropriate response of monetary policy to a sharp decline in the value of some currencies. In this paper, we empirically examine the effects on Asian exchange rates of sharply higher interest rates during the Asian financial crisis. Taking account of the currency contagion effect, our results indicate that sharply higher interest rates helped to support the exchange rates of South Korea, the Philippines, and Thailand. For Malaysia, no significant causal relation is found from the rate of interest to exchange rates, as the authorities in Malaysia did not actively adopt a high interest rate policy to defend the currency.

The role of mixed emotions in financial decision making

2011 ◽  
Author(s):  
Gergana Y. Nenkov ◽  
Deborah MacInnis ◽  
Maureen Morrin
Keyword(s):  
Decision Making ◽  
Mixed Emotions ◽  
Financial Decision Making ◽  
Financial Decision

The Performance-Variability Paradox, Financial Decision Making, and the Curious Case of Negative Hurst Exponents

2013 ◽  
Author(s):  
Stephen J. Guastello ◽  
Katherine Reiter ◽  
Anton Shircel ◽  
Paul Timm ◽  
Matthew Malon ◽  
...  
Keyword(s):  
Decision Making ◽  
Financial Decision Making ◽  
Performance Variability ◽  
Financial Decision ◽  
Hurst Exponents
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