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The Cost Structure of Consumer Finance Companies and Its Implications for Interest Rates: Evidence from the Federal Reserve Board's 2015 Survey of Finance Companies

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Abstract

Interest includes compensation not only for forbearance (forgoing current income for future income) and risk bearing but also compensation for expenses incurred to originate, service, and collect loans. The latter expenses are largely fixed, not varying much with the amount of credit.

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  • Lisa Chen & Gregory E. Elliehausen, 2020. "The Cost Structure of Consumer Finance Companies and Its Implications for Interest Rates: Evidence from the Federal Reserve Board's 2015 Survey of Finance Companies," FEDS Notes 2020-08-12, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2020-08-12
    DOI: 10.17016/2380-7172.2610
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    File URL: https://www.federalreserve.gov//econres/notes/feds-notes/the-cost-structure-of-consumer-finance-companies-and-its-implications-for-interest-rates-20200812.htm
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    File URL: https://libkey.io/10.17016/2380-7172.2610?utm_source=ideas
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    Cited by:

    1. Onyumbe Enumbe Ben Lukongo & Thomas W. Miller, 2022. "The cost of rate caps: Evidence from Arkansas," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 45(4), pages 881-909, December.
    2. Gregory E. Elliehausen & Simona Hannon & Thomas W. Miller, Jr., 2021. "A New Look at the Effects of the Interest Rate Ceiling in Arkansas," Finance and Economics Discussion Series 2021-045r1, Board of Governors of the Federal Reserve System (U.S.), revised 05 May 2023.

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