A Test of Consumer Awareness for Adults

The purpose of this study was to develop an instrument to measure adult awareness of consumer product/service information sources, consumer protection laws and channels of recourse. The process included identification of prevalent consumer problems, development of test items based on the identified problems, and assessments of the content validity and the reliability of the instrument. The process of construct validity was initiated by developing and testing hypotheses concerning the relationships between scores on the instrument and selected socio-economic characteristics of consumers. Low consumer awareness scores were predominant, supporting the need for consumer education for adults.     

The Effect of Government Regulations on Personal Loan Markets: A Tobit Estimation of a Microeconomic Model

The purpose of this paper is to analyze both theoretically and empirically the effect of selected government regulations on a high-risk personal loan market. Unlike previous studies, which have generally relied on a loosely specified theory and then tested this theory with statewide aggregate data, our analysis is based on a more tightly specified model for individual loans which is then tested using statewide disaggregated data. The empirical results indicate that the regulatory effects are not only significant but consistent with our theoretical microeconomic model.     

Credit Rationing,Income Exaggeration,and Adverse Selection in the Mortgage Market

We examine the role of borrower concerns about future credit availability in mitigating the effects of adverse selection and income misrepresentation in the mortgage market. We show that the majority of additional risk associated with “low‐doc” mortgages originated prior to the Great Recession was due to adverse selection on the part of borrowers who could verify income but chose not to. We provide novel evidence that these borrowers were more likely to inflate or exaggerate their income. Our analysis suggests that recent regulatory changes that have essentially eliminated the low‐doc loan product would result in credit rationing against self‐employed borrowers.     

Bank Information Monopolies and the Mix of Private and Public Debt Claims

This article examines the determinants of the mix of private and public debt using detailed information on the debt structure of 250 publicly traded corporations from 1980 through 1990. We find that the relationship between bank borrowing and the importance of growth opportunities depends on the number of banks the firm uses and whether the firm has public debt outstanding. For firms with a single bank relationship, the reliance on bank debt is negatively related to the importance of growth opportunities. In contrast, among firms borrowing from multiple banks, the relationship is positive.     

Manufacturing Industry and the Balance of Payments Adjustment: The United Kingdom Case

The thesis of this essay is that it is unlikely that economic growth in the UK during the rest of the 1990s will be balance-of-payments constrained in any significant sense. Our conclusion is that manufacturing industry does not and will not play a unique role in Britain's economic future. These propositions are not to be confused with two distinct and related ones. The first is that the fact that the balance of payments need not be seen as a constraint does not rule out the possibility of other problems associated with the balance of payments such as we have seen in the recent past. Secondly, the fact that manufacturing industry is not in any sense a unique part of economic activity in no way lessens its importance as a major and significant sector. This paper is in no sense a critique of manufacturing industry.