Perceived Precautionary Savings Motives: Evidence from FinTech

Francesco D’Acunto, Thomas Rauter, Christoph K. Scheuch and Michael Weber

No 26817, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D14 E21 E51 G21 G51 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-mac and nep-pay
Note: AP CF EFG ME
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Citations: View citations in EconPapers (12)

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Working Paper: Perceived Precautionary Savings Motives: Evidence from FinTech (2020)
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