Faculty News

Professor Johannes Stroebel's research on the impact of credit extension on the economy is featured

Excerpt from Bloomberg -- "In a working paper for the National Bureau of Economic Research, a group of researchers looked at 8.5 million credit card accounts. They found that for every 1 percentage point reduction in what it costs banks to borrow, banks extended $127 in credit to families with credit scores below 660. Those families spent 58¢ for every new dollar in credit. Under the same conditions, families with credit scores above 740 got $2,203 in extra credit. But they didn’t spend a penny of it. Says Johannes Stroebel of the NYU Stern School of Business, one of the authors: 'The targeting of these credit expansions is potentially to the wrong people, to the people that don’t want to borrow more.'"

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