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Time discounting predicts loan forbearance takeup

Author

Listed:
  • Edina Berlinger

    (Corvinus University of Budapest, Fővám tér 8, 1093 Budapest)

  • Sára Khayouti

    (Institute of Economics, Centre for Economic and Regional Studies (KRTK KRTI), Tóth Kálmán u. 4, 1097 Budapest)

  • Hubert János Kiss

    (Institute of Economics, Centre for Economic and Regional Studies (KRTK KRTI), Tóth Kálmán u. 4, 1097 Budapest and Corvinus University of Budapest, Fővám tér 8, 1093 Budapest)

Abstract
During the COVID-19 pandemic, many countries eased the burden of borrowers through loan forbearance. Using a representative sample of the Hungarian adult population, we investigate if time discounting and locus of control predict who takes up loan forbearance. We find convincing evidence that time discouting associates with the resort to forbearance: individuals who discount the future less are less likely to take up forbearance, even if we take into account their educational level and financial status. Data suggest that the channel through which time discounting and loan forbearance are related is savings. There is no statistically significant relationship between locus of control and forbearance takeup.

Suggested Citation

  • Edina Berlinger & Sára Khayouti & Hubert János Kiss, 2022. "Time discounting predicts loan forbearance takeup," CERS-IE WORKING PAPERS 2201, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2201
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    loan forbearance; locus of control; time discounting;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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