Researcher:
Alan, Şule

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Şule

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Alan

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Alan, Şule

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2012 - 201932020 - 20211

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    Subprime consumer credit demand: evidence from a lender's pricing experiment
    (Oxford University Press (OUP), 2013) Loranth, Gyongyi; Department of Economics; Alan, Şule; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; N/A
    Using a unique panel data set from a U.K. credit card company, we analyze the interest rate sensitivity of subprime credit card borrowers. In addition to all individual transactions and loan terms, we have access to details of a randomized interest rate experiment conducted by the lender on existing (inframarginal) loans. For the whole sample, we estimate a statistically significant 3.4 pound reduction in monthly credit demand in response to a five percentage point increase in interest rates. This aggregate response is small, but it masks very interesting heterogeneity in the sample. We find that only low-risk borrowers who fully utilize their credit cards lower their credit demand significantly when faced with an increase in interest rates. We also document that a five percentage point increase in interest rates generates significant additional revenue for the lender without inducing delinquency over a short horizon.
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    Unshrouding: evidence from bank overdrafts in Turkey
    (Wiley, 2018) Karlan, Dean; Zinman, Jonathan; Department of Economics; N/A; Alan, Şule; Cemalcılar, Mehmet; Faculty Member; Other; Department of Economics; College of Administrative Sciences and Economics; N/A; N/A; N/A
    Lower prices produce higher demand... or do they? A bank's direct marketing to holders of free checking accounts shows that a large discount on 60% APR overdrafts reduces overdraft usage, especially when bundled with a discount on debit card or autodebit transactions. In contrast, messages mentioning overdraft availability without mentioning price increase usage. Neither change persists long after the messages stop. These results do not square easily with classical models of consumer choice and firm competition. Instead, they support behavioral models where consumers underestimate and are inattentive to overdraft costs, and firms respond by shrouding overdraft prices in equilibrium.
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    Estimation of panel data regression models with two-sided censoring or truncation
    (De Gruyter Open, 2021) Honoré, B. E.; Hu, L.; Leth-Petersen, S.; Department of Economics; Alan, Şule; Faculty Member; Department of Economics; College of Administrative Sciences and Economics
    This paper constructs estimators for panel data regression models with individual specific heterogeneity and two-sided censoring and truncation. Following Powell the estimation strategy is based on moment conditions constructed from re-censored or re-truncated residuals. While these moment conditions do not identify the parameter of interest, they can be used to motivate objective functions that do. We apply one of the estimators to study the effect of a Danish tax reform on household portfolio choice. The idea behind the estimators can also be used in a cross sectional setting.
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    PublicationOpen Access
    Do disaster expectations explain household portfolios?
    (Econometric Society, 2012) Alan, Şule; Faculty Member; College of Administrative Sciences and Economics
    It has been argued that rare economic disasters can explain most asset pricing puzzles. If this is the case, perceived risk associated with a disaster in stock markets should be revealed in household portfolios. That is, the framework that solves these pricing puzzles should also generate quantities that are consistent with the observed ones. This paper estimates the perceived risk of disasters (both probability and expected size) that is consistent with observed portfolios and consumption growth between 1983 and 2004 in the United States. I find that the portfolio choices of households that have less than a college degree can be partially explained by expectations of stock market disasters only if one allows for a large probability of labor income loss at the same time. Such disaster expectations, however, are not revealed in the portfolios of educated and wealthier households: simple per-period participation costs of the stock market coupled with preference heterogeneity explain their participation and investment patterns.