トップEージ

Is It Interest Rate or Loan Amount to which Borrowers Are More Sensitive?
A Conjoint Analysis on Financial Loans

Takeshi Mori
Konan University

　This paper, unlike previous studies on consumer loans, will conduct a Contingent Valuation Method(CVM) where general consumers are asked to answer survey questions about the situations in which they take out a loan based on hypothetical interest rates and loan amounts.　CV methods are powerful methods used in a wide variety of fields such as medical economics, environmental economics, and telecommunications such as the forms of price setting and computation of penetration rates of cell phones, new medical technologies, and environmental development. Among　CVMs, Conjoint analysis has conducted in this paper. Conjoint analysis has a major advantage because it can present a circumstance that could occur in the near future as a hypothetical situation and evaluate potential effects of such a situation. I believe that this paper’s analysis method is a first application for the consumer credit and will make a contribution as a viable analysis method for such a loan market so that lenders can flexibly present future pictures. Specifically, the probability of consumer borrowing was qualitatively measured by the Conjoint analysis that presents a variety of interest rate and loan amount combinations in order to determine whether interest rate or borrowed amount is more prioritized to consumers when they take out loan plans. In the analysis, consumer choice behaviors when presented with automobile loan plans were examined.
To mention the conclusion first, as in the study of Dean Karlan & Jonathan Zinman (AER, 2008), the current study found that Japanese borrowers are relatively indifferent to loan amount, but they react more strongly to interest rate and repayment period. On the other hand, this study also found that the type of consumers who do not easily take out loans react more sensitively to borrowed amount, and despite the fact that they react to interest rate, they are indifferent to repayment period.
This paper also found that individuals with high default risk strongly prefers longer repayment period. This finding leads to a policy-level implication that in order to prevent defaults, repayment period should be set shorter, and also that repayment should be closely monitored.

→Japanese Ver.

→Back to list