Xuan S. Tam

Job Market Candidate

Job market paper:

Long-Term Contracts in Unsecured Credit Markets

This paper studies the effectiveness of longer-term unsecured credit contracts in improving credit access, consumption smoothing, and welfare. I find that longer-term contracts result in higher average borrowing interest rates and hence lower levels of borrowing and fewer borrowers in the equilibrium. In addition, I show that longer-term contracts reduce consumer welfare. I also investigate the welfare implications of interest rate ceilings and show that imposing a modest interest rate cap under long-term contracts improves welfare.