【主題】What Drives Excessive Borrowing and Under-Borrowing? A Field Experiment
【時間】2021年4月2日 星期五 11:30-13:00
【摘要】We investigate the determinants of excessive/under-borrowing. Our study differs from the literature by measuring excessive/under-borrowing, and estimating the effect of selfcontrol, financial literacy, and misperception of interest rates, in addition to present bias. We observe both excessive borrowing and under-borrowing, with higher proportion of subjects exhibiting the latter. Subjects with better self-control are less likely to exhibit excessive borrowing, and are more likely to exhibit under-borrowing. It suggests that excessive (under-) borrowing can be due to over-estimation (under-estimation) of selfcontrol. Subjects with better financial literacy are less likely to exhibit excessive borrowing. An additional level of better self-control leads to 10.34% lower borrowing interest rate in real-life. An additional level of better financial literacy leads to 3.44% lower interest rate. Borrowers exhibiting interest rate misperception pay about 11.49% higher interest rate. The findings on the role of financial literacy and misperception of interest rate suggest that excessive-borrowing is not merely a self-control problem, and it can be reduced through appropriate financial education.