Please join us for an Economics Department Seminar Series event on Friday, April 30 from 10:00-11:20 AM EST. 

Julian Jamison of the University of Exeter Business School will present his paper:

"Credit building or credit crumbling? A credit builder loan’s effects on consumer behavior, credit scores and their predictive power"


How does the large market for credit score improvement products affect consumers and market efficiency? For consumers, we use a randomized encouragement design on a standard credit builder loan (CBL) and find null average effects on scores. But a generalized random forest algorithm finds important heterogeneity, most starkly with respect to baseline installment credit activity. CBLs induce delinquency on pre-existing loan obligations, suggesting that even a seemingly modest additional claim on monthly cash flows is too much for many consumers to manage. For the market, CBL take-up reveals information: takers experience future score improvements relative to non-takers, which, given null average treatment effects, implies positive selection. However, we find suggestive evidence that the CBL weakens the score’s power for predicting default in some cases. We propose simple changes, to CBL provider strategy and credit bureau reporting categories, that could produce more uniformly positive effects for both individuals and the market.


Dr. Jamison is Professor of Economics and Director of Research at the University of Exeter Business School. His research interests are in Behavioral, Development, Health and Welfare Economics, and his work has been published in journals spanning a wide range of disciplines. He is also an Associate Editor at Behavioral Science & Policy and a Research Affiliate at both the Jameel Poverty Action Lab and the Innovations for Poverty Action. Here please find a link to his website

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