Thursday, March 14, 2019
4:00pm to 5:00pmAdd to Cal
Spillover Effects of the Opioid Epidemic on Consumer Finance
Mark Jansen, Assistant Professor of Finance, Eccles School of Business, University of Utah,
Abstract: I examine the impact of the opioid epidemic on subprime auto lending. Using a difference-in-differences framework, I find that a 10% increase in county-level opioid abuse causes a 2.9% increase in loan defaults. Moreover, the resulting higher default rates and weaker predictive performance of traditional credit measures (e.g., FICO score) generates a negative externality for borrowers in opioid-afflicted areas. In these areas, loan costs for subprime borrowers are 4.4% higher.
Finance Seminars at Caltech are funded through the generous support of The Ronald and Maxine Linde Institute of Economic and Management Sciences (lindeinstitute.caltech.edu).
For more information, please contact Sabrina Hameister by phone at 626-395-4228 or by email at [email protected] or visit the full paper, "Spillover Effects of the Opioid Epidemic on Consumer Finance," here..