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Posts Tagged ‘Credit’

Credit Scores: Do Nice Guys Finish Last?

A new study takes advantage of the increasing (and somewhat controversial) use of credit scores as a tool for evaluating job candidates to examine whether scores are affected by how nice you are. Jeremy Bernerth, Daniel Whitman, Shannon Taylor and H. Jack Walker found that while there is a positive relationship between “conscientiousness and FICO scores, there is a negative relationship between agreeableness and FICO scores”:

The finding that credit scores accounted for a substantial proportion of variance in externally rated performance variables gives some credence to the practice of using credit scores as a screening tool. However, null findings between credit scores and workplace deviance call into question claims that employees with poor credit will engage in behaviors intended to harm the organization (Gallagher, 2006; Oppler et al., 2008).


Prediction Markets on the Debt Ceiling, U.S. Credit Downgrade

Over at Intrade, there are two “hot” markets involving the odds that Congress will raise the U.S. debt ceiling.
– Congress to approve increase in U.S. debt ceiling before midnight on July 31, 2011: 40% (It was 65% a month ago)
– Congress to approve increase in U.S. debt ceiling before midnight Aug. 31, 2011: 75% (It was 85% a month ago)
And at Irish bookmaker PaddyPower.com, here is the line on a Moody’s downgrade:
Will Moody’s downgrade the U.S.?
-Yes: 9/2
-No: 1/8


Do You Owe $23 Quadrillion?

An unidentified computer glitch has led Visa to overcharge several of its cardholders for routine purchases at drug stores, gas stations, and restaurants, to the tune of $23,148,855,308,184,500.00 each. These charges, as far as we can tell, exceed the sum total of wealth accumulated in human history.


Who Needs Banks?

In the face of a difficult credit squeeze, more and more borrowers are turning to peer-to-peer lending networks, which directly connect lenders and borrowers. These networks have recently financed nearly half a billion dollars in lending. Ray Fisman examines these new networks and discusses the conflicting economic research on them. While economists have found some evidence of “human frailty and bias” in lending decisions, one recent study of a specific network concluded that the, “…credit market operates quite efficiently and without a bank pocketing a slice of the proceeds.”


Is Untrustworthy the New Ugly?

| A Rice University study found that lenders may judge your creditworthiness based on how trustworthy they think you look. The researchers didn’t pinpoint which physical characteristics look most or least trustworthy, but if they do in the future, might plastic surgery go from a luxury good to a financially necessity? [%comments]


The True Cost of Credit

My former student Sean Harper has put together a nifty little web site, truecostofcredit.com, that allows you to see how much merchants are charged when you use your credit card. I was surprised at how high the fees were. For instance, in this example of a Mastercard, when you buy a $1.50 pack of gum at a convenience store, the . . .


The Fiendish Genius of Credit-Card Minimum Payments

New research finds that credit-card holders pay down their debts more slowly when their statements suggest a minimum monthly installment. The Economist reports on the study, by University of Warwick psychologist Dr. Neil Stewart: Mr. Stewart presented 413 people with mock credit-card bills of ?435.76 (about $650) that were identical — except that only half mentioned a minimum payment of . . .


Diamond and Kashyap on the Recent Financial Upheavals

As an economist, I am supposed to have something intelligent to say about the current financial crisis. To be honest, however, I haven’t got the foggiest idea what this all means. So I did what I always do when something related to banking arises: I knocked on the doors of my colleagues Doug Diamond and Anil Kashyap, and asked them . . .


Adopt and Prosper?

An article in today’s Wall Street Journal about online lending reports that Zopa, a British person-to-person lending market, is starting operations in the U.S. It will join, among others, Prosper.com, which the WSJ reports will issue $100 million in person-to-person loans this year, with future loan originations projected to be $1 billion in 2010 and $9 billion in 2017. Can . . .