Quotation D`Acunto, Francesco, Rauter, Thomas, Scheuch, Christoph, Weber, Michael. 2019. Perceived Precautionary Savings Motives: Evidence from FinTech.


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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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Perceived Precautionary Savings Motives: Evidence from FinTech
Year 2019
URL https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3499013
JEL D14, E21, E51, G21

Associations

People
Scheuch, Christoph (Details)
External
D`Acunto, Francesco (Boston College Carroll School of Management, United States/USA)
Rauter, Thomas (The University of Chicago Booth School of Business, United States/USA)
Weber, Michael (The University of Chicago Booth School of Business, United States/USA)
Organization
Institute for Financial Research IN (Details)
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