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Publications
  • 2022
  • Working Paper

Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns

By: Marco Di Maggio, Emily Williams and Justin Katz
  • Format:Print
  • | Language:English
  • | Pages:53
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Abstract

Firms offering "buy now, pay later" (BNPL) point-of-sale installment loans with minimal underwriting and low interest have captured a growing fraction of the market for short-term unsecured consumer credit. We provide a detailed look into the US BNPL market by constructing a large panel of BNPL users from transaction-level data. We document characteristics of users and usage patterns, and use BNPL roll-out to provide new insights into consumer responses to unsecured credit access. BNPL access increases both total spending levels and the retail share in total spending, with magnitudes too large for standard intertemporal and static substitution effects to explain. These findings hold for consumers with and without inferred liquidity constraints. Our findings are more consistent with a "liquidity flypaper effect" where additional retail liquidity through BNPL "sticks where it hits", than a standard lifecycle model with liquidity constraints.

Keywords

Household Finance; Fintech; Consumer Credit; Credit; Consumer Behavior

Citation

Di Maggio, Marco, Emily Williams, and Justin Katz. "Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns." NBER Working Paper Series, No. 30508, September 2022.
  • SSRN
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About The Authors

Marco Di Maggio

Finance
→More Publications

Emily Williams

Finance
→More Publications

More from the Authors

    • February 2023
    • Faculty Research

    Adyen: Reshaping the Payment Ecosystem

    By: Marco Di Maggio, Antonio Moreno and Elena Corsi
    • January 2023
    • Faculty Research

    Lupoli Companies: Riverwalk - Making an Impact

    By: Richard S. Ruback, Marco Di Maggio, Dave Habeeb and Ruth Page
    • 2023
    • Faculty Research

    Savings and Consumption Responses to Student Loan Forbearance

    By: Justin Katz
More from the Authors
  • Adyen: Reshaping the Payment Ecosystem By: Marco Di Maggio, Antonio Moreno and Elena Corsi
  • Lupoli Companies: Riverwalk - Making an Impact By: Richard S. Ruback, Marco Di Maggio, Dave Habeeb and Ruth Page
  • Savings and Consumption Responses to Student Loan Forbearance By: Justin Katz
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