Field of Study and Financial Problems: How Economics Reduces the Risk of Default
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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Field of Study and Financial Problems : How Economics Reduces the Risk of Default. / Hvidberg, Kristoffer Balle.
I: Review of Financial Studies, Bind 36, Nr. 11, 03.05.2023, s. 4677–4711.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Field of Study and Financial Problems
T2 - How Economics Reduces the Risk of Default
AU - Hvidberg, Kristoffer Balle
PY - 2023/5/3
Y1 - 2023/5/3
N2 - This paper documents how extensive economic education can reduce the risk of getting into financial trouble by comparing people who enter business and economics programs with people who enter other higher education programs. To identify the causal effect, I exploit GPA admission thresholds that quasi-randomize applicants near the thresholds into different higher education programs. I find that admission to an economics program reduces the probability of loan default and delinquency by one half. This large reduction is associated with changes in financial behavior, but it is not associated with differences in the level or stability of people’s income.
AB - This paper documents how extensive economic education can reduce the risk of getting into financial trouble by comparing people who enter business and economics programs with people who enter other higher education programs. To identify the causal effect, I exploit GPA admission thresholds that quasi-randomize applicants near the thresholds into different higher education programs. I find that admission to an economics program reduces the probability of loan default and delinquency by one half. This large reduction is associated with changes in financial behavior, but it is not associated with differences in the level or stability of people’s income.
U2 - 10.1093/rfs/hhad034
DO - 10.1093/rfs/hhad034
M3 - Journal article
VL - 36
SP - 4677
EP - 4711
JO - Review of Financial Studies
JF - Review of Financial Studies
SN - 0893-9454
IS - 11
ER -
ID: 371275362