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Borrowing Decisions of Credit Constrained Consumers and The Role of Financial Literacy

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  • Swarnankur Chatterjee

    (University of Georgia)

Abstract

This study uses a new nationally representative dataset (National Financial Capability Study, 2009) to examine the association between individuals' financial literacy and their high-cost borrowing decisions. The results indicate that financial literacy is indeed negatively associated with high-cost borrowing behaviors. Other factors such as lower levels of income, gender, educational attainment, and the recent downturn in economic fortune of a household were also associated with high-cost borrowing behaviors. This study's findings have important policy implications for improving individual financial decision-making of credit constrained consumers.

Suggested Citation

  • Swarnankur Chatterjee, 2013. "Borrowing Decisions of Credit Constrained Consumers and The Role of Financial Literacy," Economics Bulletin, AccessEcon, vol. 33(1), pages 179-191.
    • Handle: RePEc:ebl:ecbull:eb-13-00039
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    References listed on IDEAS

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    9. Eun Kim & Sherman Hanna & Swarn Chatterjee & Suzanne Lindamood, 2012. "Who Among the Elderly Owns Stocks? The Role of Cognitive Ability and Bequest Motive," Journal of Family and Economic Issues, Springer, vol. 33(3), pages 338-352, September.
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    Cited by:

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    2. Tae-young Pak & Swarnankur Chatterjee, 2016. "Savings Decisions of American Households: The Roles of Financial Literacy and Financial Practice," Economics Bulletin, AccessEcon, vol. 36(3), pages 1486-1496.
    3. Katarzyna Czech & Luiza Ochnio & Michał Wielechowski & Serhiy Zabolotnyy, 2024. "Financial Literacy: Identification of the Challenges, Needs, and Difficulties among Adults Living in Rural Areas," Agriculture, MDPI, vol. 14(10), pages 1-18, September.
    4. Bartkevičiūtė Gintarė & Gaigalienė Asta & Legenzova Renata, 2018. "The Assessment of Determinants of Credit Services’ Choices among Students," Management of Organizations: Systematic Research, Sciendo, vol. 79(1), pages 7-23, June.
    5. Swarn Chatterjee, 2014. "Effect of False Confidence on Asset Allocation Decisions of Households," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(1), pages 01-11, January.

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    More about this item

    Keywords

    Financial Literacy; Credit; Household Economics;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • D1 - Microeconomics - - Household Behavior

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