Perceived Precautionary Savings Motives: Evidence from FinTech

Francesco D'Acunto, Thomas Rauter, Christoph Scheuch, Michael Weber and Michael Weber
Authors registered in the RePEc Author Service: Michael Weber

No 8123, CESifo Working Paper Series from CESifo

Abstract: We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, liquid users react more than others but do not tap into negative deposits. The credit line acts as a form of insurance. These results are not fully consistent with models of financial constraints, buffer stock models, or present-bias preferences. We label this channel perceived precautionary savings motives: Liquid users behave as if they faced strong precautionary savings motives even though no observables, including elicited preferences and beliefs, suggest they should.

Keywords: household finance; consumption; behavioral finance (search for similar items in EconPapers)
JEL-codes: D14 E21 E51 G21 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: Perceived Precautionary Savings Motives: Evidence from FinTech (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8123

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