Date of Award

Spring 3-10-2016

Degree Type


Degree Name

Doctor of Philosophy (PhD)


Risk Management and Insurance

First Advisor

Stephen H. Shore

Second Advisor

Conrad Ciccotello

Third Advisor

Glenn W. Harrison

Fourth Advisor

Georges Dionne


This dissertation consists of three chapters. The first chapter uses credit card data to estimate the impact of increasing minimum payments on delinquency, payments, spending, and write-offs. The identification strategy exploits an unusual institutional feature: borrowers can use their account to make purchases with both revolving loans (on which minimum payments increased) and term loans (on which there was no change). Payment increases by delinquent borrowers are insufficient to match increasing minimums, resulting in lower cure rates and an increase in write-offs. Affected borrowers migrate away from these accounts by decreasing charges and increasing payments, consequently lowering the interest earned by the bank.

The second chapter analyzes the response of consumption, debt, and delinquency to an anticipated increase in cash-on-hand in the presence of liquidity constraints. It uses account-level data from a North American bank that allows clients to make purchases using credit card and term loans on the same account. Term loans are paid off in a predetermined number of equal monthly installments. The end of a term loan therefore generates a predictable increase in cash-on-hand relative to months in which payments were required. Consistent with a model in which consumers are potentially liquidity constrained, consumers \textit{ex-ante} identified as unconstrained do not increase their credit card expenditures, constrained consumers increase both their credit card expenditures and balance, and consumers for whom the credit card is the marginal source of funds decrease their balance. The propensity to take out a new term loan increases for all consumers, whether constrained or not. About 4% of unconstrained consumers delay taking out a new term loan until the original loan is repaid, contrary to theoretical predictions. Paying off the term loan reduces financial delinquency and the probability of default.

The third chapter analyzes the comovement of personal savings and income using administrative data provided by a North American bank that records the sum of monthly direct deposit income into its clients' checking accounts. It investigates how permanent and transitory income changes are smoothed by checking account balances. Transitory income changes, whether positive or negative, have only transitory effects on checking account balances, suggesting that consumption is excessively sensitive to them compared to theoretical predictions. Permanent income changes lead to permanent adjustments in consumption and modest permanent adjustments in checking account balances, consistent with theoretical predictions. There is evidence of anticipation of future income changes as much as three months in advance.