Thursday, March 14, 2019
4:00 PM - 5:00 PM
Baxter B125

Finance Seminar

Spillover Effects of the Opioid Epidemic on Consumer Finance
Mark Jansen, Assistant Professor of Finance, Eccles School of Business, University of Utah,

Abstract: I examine the impact of the opioid epidemic on subprime auto lending. Using a difference-in-differences framework, I find that a 10% increase in county-level opioid abuse causes a 2.9% increase in loan defaults. Moreover, the resulting higher default rates and weaker predictive performance of traditional credit measures (e.g., FICO score) generates a negative externality for borrowers in opioid-afflicted areas. In these areas, loan costs for subprime borrowers are 4.4% higher.

Finance Seminars at Caltech are funded through the generous support of The Ronald and Maxine Linde Institute of Economic and Management Sciences (lindeinstitute.caltech.edu).

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