Objective Whether (and why) the market for consumer credit is inefficient is still an open question with important implications for household well-being. The research in this proposal will study sources of inefficiencies in two burgeoning consumer credit institutions: high-cost credit and on-line marketplaces. Each institution serves borrowers on opposite ends of the wealth and credit risk spectrum. Thus, they provide an ideal laboratory for studying the wide range of economic frictions that shape the access and price of credit for households. Despite growing attention from academics and severe scrutiny by policymakers, the economic and social impact of both institutions are yet not well understood.The first stream of projects in the proposal is aimed at providing new evidence on the trade-offs involved in the use of high-cost credit. High-cost credit, such as Payday loans, is often the only source of funding for poor households. Alleviating liquidity shortages with high-cost credit may have negative long term consequences for financial health, an effect often attributed to borrower self-control problems. In the first project of the stream I use data from a Payday lender in the U.K. to explore a new channel for this effect—reputation—that does not rely on borrower irrationality. The second project combines data from 21 police forces in the U.K. to evaluate the social consequences of high-cost credit through the lens of criminal behavior.The second stream of projects characterizes previously unexplored sources of adverse selection in credit markets, with substantive positive and normative implications. Using data from the largest on-line marketplace in the U.S. I aim to demonstrate how asymmetric information distorts maturity choice, and how information gathering by the lender can drive away low-risk borrowers. The final project of this stream will use previously unavailable data to produce the first comprehensive characterization of on-line credit marketplaces worldwide. Fields of science social scienceseconomics and businesseconomics Keywords Consumer finance Programme(s) H2020-EU.1.1. - EXCELLENT SCIENCE - European Research Council (ERC) Main Programme Topic(s) ERC-2017-COG - ERC Consolidator Grant Call for proposal ERC-2017-COG See other projects for this call Funding Scheme ERC-COG - Consolidator Grant Host institution LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE Net EU contribution € 1 017 851,00 Address Houghton Street 1 WC2A 2AE London United Kingdom See on map Region London Inner London — West Westminster Activity type Higher or Secondary Education Establishments Links Contact the organisation Opens in new window Website Opens in new window Participation in EU R&I programmes Opens in new window HORIZON collaboration network Opens in new window Total cost € 1 017 851,00 Beneficiaries (1) Sort alphabetically Sort by Net EU contribution Expand all Collapse all LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE United Kingdom Net EU contribution € 1 017 851,00 Address Houghton Street 1 WC2A 2AE London See on map Region London Inner London — West Westminster Activity type Higher or Secondary Education Establishments Links Contact the organisation Opens in new window Website Opens in new window Participation in EU R&I programmes Opens in new window HORIZON collaboration network Opens in new window Total cost € 1 017 851,00