Brian Melzer's Home Page

Brian T. Melzer
Assistant Professor
Finance Department

Kellogg School of Management, Northwestern University

Curriculum vitae

Fields of Research and Teaching Interest:

Household finance, real estate, financial institutions, corporate finance

Published Papers:

"The Real Costs of Credit Access: Evidence from the Payday Lending Market," Quarterly Journal of Economics, Vol 126 No 1, (February 2011) 517-555.

"Competition in a Consumer Loan Market: Payday Loans and Overdraft Credit," with Donald P. Morgan, Journal of Financial Intermediation, Vol 24 No 1, (January 2015) 25-44.

"Mortgage Debt Overhang: Reduced Investment by Homeowners at Risk of Default," Journal of Finance, forthcoming. (Link to prior version of working paper)

"Retail Financial Advice: Does One Size Fit All?" with Stephen R. Foerster, Juhani T. Linnainmaa and Alessandro Previtero, Journal of Finance, forthcoming. (Link to prior version of working paper)

  • 2015 Canadian Investment Research Award, CFA Society Toronto & Hillsdale Investment Management (Award announcement)
Working Papers:

"Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit," with Joanne W. Hsu and David A. Matsa, July 2014, revise and resubmit at American Economic Review.

"Spillovers from Costly Credit," August 2014, revise and resubmit at Review of Financial Studies.

"Accelerator or Brake? Microeconomic estimates of the 'Cash for Clunkers' and Aggregate Demand" with Daniel Green, Jonathan A. Parker and Ryan Pfirrmann-Powell, December 2014.

"Loan Contracting in the Presence of Usury Limits" with Aaron Schroeder, July 2015.

"Non-Cognitive Abilities and Loan Delinquency" with Camelia M. Kuhnen, November 2014. Draft coming soon.

ABSTRACT: Research on household financial decisions has largely focused on the importance of cognitive abilities in decision-making, emphasizing for example that IQ and math ability predict stock market participation and the avoidance of financial mistakes. This paper takes a broader perspective by exploring the role of non-cognitive abilities in household borrowing and default decisions. Within the fields of labor and education economics, non-cognitive traits such as self-efficacy the perceived ability to control ones future outcomes predict substantial differences in school achievement and employment outcomes. Using longitudinal household survey data, we show that an individuals self- efficacy during childhood also predicts differences in future delinquency on debt and bill payments. The effect of self-efficacy on delinquency is both substantial and robust; a one standard deviation increase in self-efficacy corresponds to a 15-20% decrease in the likelihood of delinquency, and this effect is not explained by differences in gender, race, cognitive ability, educational attainment and income, contemporaneous or past.

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