Working Paper | HBS Working Paper Series | 2010

A Brief Postwar History of U.S. Consumer Finance

by Andrea Ryan, Gunnar Trumbull and Peter Tufano

Abstract

This article describes the consumer finance sector in the US since World War II. We first define the sector in terms of the functions delivered by firms (payments, savings/investing, borrowing, managing risk, and providing advice.) We provide time series evidence on major trends in consumption, savings, and borrowing. Examining consumer decisions, changes in regulation, and business practices, we identify four major themes that characterize the sector: (a) innovation that increased the choices available to consumer; (b) enhanced access in the form of broadening participation of consumers in financial activities, (c) do-it-yourself consumer finance, which allowed and forced consumers to take greater responsibility for their own financial lives, and (d) the resultant increase in household risk taking.

Keywords: Decision Choices and Conditions; Borrowing and Debt; Mortgages; Personal Finance; Business History; Innovation and Invention; Risk and Uncertainty; Financial Services Industry; United States;

Citation:

Ryan, Andrea, Gunnar Trumbull, and Peter Tufano. "A Brief Postwar History of U.S. Consumer Finance." Harvard Business School Working Paper, No. 11-058, December 2010.