Borrower Heterogeneity and the (Ir)Rational Demand for Short-Term Credit

David M. Becker, Lena Jaroszek, Martin Weber

Research output: Contribution to conferencePaperResearch


Short-term credit serves bridging short-term liquidity gaps. Instead, short-term credit is often used over an extended period of time. Such behavior could stem from individuals’ preference for immediate consumption. We thus analyze, whether short-term credit usage, specifically overdraft usage, is related to time preferences. Combining bank account data with survey responses provides us with evidence that individuals with higher implied discount rates use overdrafts more frequently. We disentangle a normative and a behavioral explanation. Our results are consistent with the existence of self-control problems in the form of present-biased
time preference.
Original languageEnglish
Publication date2017
Number of pages66
Publication statusPublished - 2017
EventYoung Scholars Nordic Finance Workshop 2017 - Aarhus University, Aarhus, Denmark
Duration: 23 Nov 201724 Nov 2017


ConferenceYoung Scholars Nordic Finance Workshop 2017
LocationAarhus University
Internet address


  • Consumer debt
  • Credit lines
  • Impatience
  • Impulsiveness
  • Overdrafts

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