Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216519
Authors: 
D'Acunto, Francesco
Rauter, Thomas
Scheuch, Christoph
Weber, Michael
Weber, Michael
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper 8123
Abstract: 
We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, liquid users react more than others but do not tap into negative deposits. The credit line acts as a form of insurance. These results are not fully consistent with models of financial constraints, buffer stock models, or present-bias preferences. We label this channel perceived precautionary savings motives: Liquid users behave as if they faced strong precautionary savings motives even though no observables, including elicited preferences and beliefs, suggest they should.
Subjects: 
household finance
consumption
behavioral finance
JEL: 
D14
E21
E51
G21
Document Type: 
Working Paper

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