Searchable Title

Financial Literacy and Subprime Mortgage Delinquency: Evidence from a Survey Matched to Administrative Data: Working Paper 2010-10. Copyright: Public Domain

Reference Type

Web Page

Authors, Section

Gerardi, Kristopher; Goette, Lorenz; Meier, Stephan; Federal Reserve Bank of Atlanta

Title, Section

Financial Literacy and Subprime Mortgage Delinquency: Evidence from a Survey Matched to Administrative Data: Working Paper 2010-10. Copyright: Public Domain

Publication Year

2010

Publisher

Federal Reserve Bank of Atlanta

Place of Publication

Atlanta, GA

Availability

online

Abstract

This paper investigates whether a particular aspect of borrowers' financial literacy - their numerical ability - may have played a role. We measure several aspects of financial literacy and cognitive ability in a survey of subprime mortgage borrowers who took out mortgages in 2006 or 2007 and match these measures to objective data on mortgage characteristics and repayment performance. We find a large and statistically significant negative correlation between numerical ability and various measures of delinquency and default.

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