Abstract
In order to promulgate effective consumer credit regulation, policy makers must understand the factors behind the supply of and demand for consumer credit as well as the economic and sociological benefits and detriments of consumer borrowing and lending. After an explanation of each of these factors and of the various types of consumer finance, this chapter suggests a regulatory approach that will reduce the damage but allow beneficial transactions to continue to occur. This inquiry includes the burgeoning field of behavioral economics which seeks insight into how and why individuals make the decisions we make. The chapter also sheds light on the macro and micro sociological and economic impacts of these choices.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
References
Angeletos, G., Laibson, D., Repetto, A., Tobacman, J., & Weigberg, S. (2001). The hyperbolic consumption model: Calibration, simulation and empirical evaluation. Journal of Economic Perspective, 15(3), 47–68.
Bar-Gill, O. (2004). Seduction by plastic. Northwestern University Law Review, 98(4), 1373–1434.
Bar-Gill, O., & Warren, E. (2008). Making credit safer. University of Pennsylvania Law Review, 157, 1–101.
Brady, P. J., Canner, G., & Maki, D. M. (2002). The effects of recent mortgage refinancing. Federal Reserve Bulletin, 86(July), 441–450.
Bricker, J., Dettling, L. J., Henriques, A., Hsu, J.W., Moore, K. B., Sabelhaus, J., et al. (2014). Changes in U.S. family finances from 2010 to 2013: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, 100(4), 1–40.
Bricker, J., Kennickell, A. B., Moore, K. B., Sabelhaus, J. (2012). Changes in U.S. family finances from 2007 to 2010: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, 98(2), 1–80.
Burhouse, S. (2003). Evaluating the consumer lending revolution. FYI: An Update on Emerging Issues. Retrieved March 15, 2007, from http://www.fdic.gov/bank/analytical/fyi/2003/091703fyi.html
Caldor, L. (1999). Financing the American dream. Princeton, NJ: Princeton University Press.
Campbell, J., Jackson, H., Madrian, B., & Tufano, P. (2011). Consumer financial protection. Journal of Economic Perspective, 25(1), 91–114.
Canner, G., Dynan, K., & Passmore, W. (2002). Mortgage refinancing in 2001 and early 2002. Federal Reserve Bulletin, 88(December), 469–481.
Center for Responsible Lending Website (2014). http://www.responsiblelending.org/
Chomsisengphet, S., & Pennington-Cross, A. (2006). The evolution of the subprime mortgage market. Federal Reserve Bank of St. Louis Review, 88(1), 31–92.
Collins, J. M. (2013). The impacts of mandatory financial education: Evidence from a randomized field study. Journal of Economic Behavior & Organization, 95, 146–158.
Da Casta, P. N. (2014, August 26). Bernanke: 2008 meltdown was worse than great depression. Wall Street Journal. Retrieved http://blogs.wsj.com/economics/2014/08/26/2008-meltdown-was-worse-than-great-depression-bernanke-says/
Ellis, D. (1998). The effect of consumer interest rate deregulation on credit card volumes, charge-offs, and the personal bankruptcy rate, Bank Trends, (98-05), 1–11.
FDIC. (2003). Evaluating the consumer lending revolution. Washington, DC: Author. Retrieved from https://www.fdic.gov/bank/analytical/fyi/2003/091703fyi.html.
Federal Reserve Bank of New York. (n.d.). Household credit. Retrieved from http://www.newyorkfed.org/regional/householdcredit.html
Hyman, L. (2011). Debtor nation: The history of America in red ink. Princeton, NJ: Princeton University Press.
Kirsch, L., Mayer, R. N., & Silber, N. I. (2014). The CFPB and payday lending: New agency/old problem. Journal of Consumer Affairs, 48(1), 1–16.
Klywev, V., & Mills, P.(2006). Is housing wealth an ATM? The relationship between housing wealth, home equity withdrawal and savings rates. IMF Working Paper 2006.
Krainer, J., & Marquis, M. (2003). Mortgage refinancing. FRBSF Economic Letter, 2003-29, 1–3.
Lea, S. E., Webley, P., & Levine, R. M. (1993). The economic psychology of consumer debt. Journal of Economic Psychology, 14(1), 85–119.
Levenger, B., & Zabek, M. A. (2011). Debit or Credit. Communities in Banking 2011. In G. M. Breakwell (Ed.), The social psychology of political and economic cognition (pp. 161–183). London: Surrey University Press.
Maki, D. M., & Michael G. P. (2001). Disentangling the wealth effect: A cohort analysis of household saving in the 1990s. Finance and Economics Discussion Series 2001–21, Board of Governors of the Federal Reserve System. Retrieved from http://www.federalreserve.gov/pubs/feds/
Mann, R. (2006). Charging ahead: The growth and regulation of payment card markets around the world. Cambridge: Cambridge University Press.
Mann, R. J. (2013). Assessing the optimism of payday loan borrowers. Columbia Law and Economics Working Paper, (443).
Manning, R. D. (2000). Credit card nation: The consequences of America’s addiction to credit. New York: Basic Books.
Martin, N., & Sweet, T. (2006). Mind games: Rethinking BAPCPA’s debtor education provisions. Southern Illinois University Law Journal, 31, 517–547.
McConnell, M. M., Peach, R. W., & Al-Haschim, A. (2003). After the refinancing boom: Will consumers scale back their spending? Current Issues in Economics and Finance, 9(12), 1–7.
Mian, A., & Sufi, A. (2015). House of debt: How they (and you) caused the great recession, and how we can prevent it from happening again. Chicago: University of Chicago Press.
Montezemolo, S. (2013). Payday lending abuses and predatory practices. Durham, NC: Center for Responsible Lending. Retrieved from http://www.responsiblelender.org/state-of-lending/reports/10-Payday-Loans.pdf.
Pacelle, M. (2004, July 6). Growing profit source for banks: Fees from riskiest card holders, late payers and big borrowers are becoming cash cows. Wall Street Journal, Retrieved http://www.WSJ.com
Renuart, E., & Thompson, D. (2008). The truth, the whole truth, and nothing but the truth: Fulfilling the promise of truth in lending. Yale Journal on Regulation, 25(181), 230–231.
Ritzer, G. (1995). Expressing America: A critique of the global credit card society. Thousand Oaks, CA: Pine Forge Press.
Schor, J. B. (1998). The overspent American: Why we want what we don’t need. New York: Basic Books.
Shen, S., Abdoul, G., Sam, A. G., & Jones, E. (2014). Credit card indebtedness and psychological well-being over time: Empirical evidence from a household survey. Journal of Consumer Affairs, 48(3), 431–456.
Sovern, J. (2010). Preventing future economic crises through consumer protection law or how the truth in lending act failed the subprime borrowers. Ohio State Law Journal, 71(4), 761–844.
Wallace, G. (1976). The uses of low rate ceilings reexamined. Boston University Law Review, 56(3), 451–497.
Warren, E., & Tyagi, A. (2003). The two-income trap: Why middle class mothers and fathers are going broke. New York: Basic Books.
White, M. (2007). Bankruptcy reform and credit cards (NBER Working Series Paper 13265). Retrieved from http://www.nber.org/papers/w13265
Willis, L. (2008). Against financial literacy. Iowa Law Review, 94(08–10), 197–285.
Xiao, J. J., & Yao, R. (2014). Consumer debt delinquency by family lifecycle categories. International Journal of Bank Marketing, 32(1), 43–59.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2016 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Lander, D.A. (2016). Consumer Credit Regulation. In: Xiao, J. (eds) Handbook of Consumer Finance Research. Springer, Cham. https://doi.org/10.1007/978-3-319-28887-1_25
Download citation
DOI: https://doi.org/10.1007/978-3-319-28887-1_25
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-28885-7
Online ISBN: 978-3-319-28887-1
eBook Packages: Behavioral Science and PsychologyBehavioral Science and Psychology (R0)