Individual Consumption Response to Expanding Credit Access: Evidence from Online Cash Loan Platform

This paper exploits a detailed new dataset with comprehensive financial and consumption information to investigate the relationship between a cash-loan borrower’s access to credit and their respective consumption response. In particular, we test whether consumption among borrowers with a high level of addiction is more sensitive to a given change in credit. We use an exogenous credit supply shock to cash-loan borrowers and show that expanding credit access is positively associated with increased individual borrowers’ consumption, especially on gaming related consumption.