Emergence of Captive Finance Companies and Risk Segmentation in Loan Markets: Theory and Evidence
研究拥有市场势力的耐用品卖家为何设立专属金融公司，并预测其信贷标准比银行更宽松，导致贷款违约率更高，利用美国信用局数据验证了这一理论。
A seller with some degree of market power in its product market can earn rents. In this context, there is a gain to granting credit to purchase of the product and thus to the establishment of a captive finance company. This paper examines the optimal behavior of such a durable good seller and its captive finance company. The model predicts a critical difference between the captive finance company's credit standard and that of independent lenders (“banks”), namely, that the captive finance company will adopt a more lenient credit standard. Thus, we should expect the likelihood of repayment of a captive loan to be lower than that of a bank loan, other things equal. This prediction is tested using a unique data set drawn from a major credit bureau in the United States, and the evidence supports the theoretical prediction.