Business, Management and Accounting
8 years ago

Loan prices now accurately reflect borrower credit risk, impacting consumer credit markets.

Journal of Consumer Affairs
Consumer Credit Risk and Pricing
Darryl E. Getter

Paper Summary

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The article examines how loan prices reflect the credit risk of borrowers in consumer credit markets. It shows that riskier borrowers can get loans if they are willing to pay higher costs. The study suggests that the key issue is whether loan prices accurately reflect borrower credit risk levels.