Consumer Finance: Markets, Product Design, and FinTech

Readings

Ses #	Topics	Readings
1	Introduction and overview of consumer financial markets	Tufano, Peter, Andrea Ryan, and Daniel Schneider, “An Introduction to Consumer Credit” Harvard Business School Note No. 9-209-107. [Available at SSRN.] Zachary Karabell, “The Uberization of Money,” Wall Street Journal, Nov 6, 2015. Randall Smith, “Challenged by Upstarts, Lenders Try New Strategy: Cooperation,” New York Times, Jan 7, 2016. Optional Campbell, John Y. “Household Finance.” Journal of Finance 61, No. 4 (2006): 1553-1604. Chapter 6 in “Household Finance,” World Bank, Mind Society and Behavior, World Development Report 2015. Campbell, John Y., Howell E. Jackson, Brigitte C. Madrian and Peter Tufano. “Consumer Financial Protection.” Journal of Economic Perspectives 25, No. 1 (2011): 91-114.
2	How people should behave: economic models of household financial behavior	Textbook summary of traditional economic model: Chapters 4.1 and 4.A in Abel, Andrew B., Ben Bernanke, and Dean Croushore, Macroeconomics, Pearson, 2013. ISBN: 978-0132992282. Optional (advanced) Chapter 2 in Ang, Andrew, Asset Management, Oxford University Press. ISBN: 978-0199959327. Carroll, Christopher D., “Solution Methods for Microeconomic Dynamic Stochastic Optimization Problems.”
3	How people do behave: behavioral biases, financial decisions, and markets	Chapter 4 in Wilkison, N. and M. Klaes, An Introduction to Behavioral Economics, 2nd Edition, Revised, 2012. ISBN: 978-0230291461. “Small Changes, Real Impact: Applying Behavioral Economics in Asset-building Programs,” A brief from the BETA Project, December 2013. Optional Chapters 6 and 8 in Wilkison, N. and M. Klaes, An Introduction to Behavioral Economics, 2nd Edition, Revised, 2012. ISBN: 978-0230291461. Cohen, J. “The Vulcanization of the Human Brain: A Neural Perspective on Interactions Between Cognition and Emotion.” Journal of Economic Perspectives 19, No. 4 (2005): 3–24. Thaler, Richard. “Mental Accounting Matters.” Journal of Behavioral Decision Making, 12(1999): 183-206. Tversky, A. and D. Kahneman. “The Framing of Decisions and the Psychology of Choice.” Science 211 (1981): 453–458.
4	Financial coaching and behavioral economics	Schoar, Antoinette and Piyush Tantia, “The Financial Health Check: A Behavioral Approach to Financial Coaching” (PDF), New American Foundation, March 2014. Chapter 6 in Thaler, Richard H. and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness, Yale University Press, 2008. ISBN: 978-0143115267.
5	Selling personal financial advice	Schifrin, Debra and John Beshears, “Hello Wallet,” Harvard Business School Case No. F-275, February 10, 2011.
6	Risk-based pricing in consumer credit: credit cards and regulation	Orszag, Jonathan and Susan Manning, “An Economic Assessment of Regulating Credit Card Fees and Interest Rates,” 2007. Sections I and II, pp. 1-28. Frank, Joshua, “Predatory Credit Card Lending,” Center for Responsible Lending (CRL), May 8, 2012, pp. 1-14.
7	Consumer insurance markets	Cole, Shawn A. and Peter Tufano, BASIX, Harvard Business School Case No. 9-207-099, February 2007. (Revised October 2007.)
8	Peer to peer lending	Stone, C. A. and Anne Zissu, Tufano, Peter, Howell Jackson and Andrea Ryan, “Lending Club,” Harvard Business School Case No. 9-210-052, December. 17, 2010
9	Securities backed by consumer debts	Chapter 1 in Stone, C. A. and Anne Zissu, The Securitization Markets Handbook: Structures and Dynamics of Mortgage- and Asset-backed Securities, Bloomberg Press, Second Edition, 2012. ISBN: 978-1118006740.
10	Fintech lending in China	No readings
11	Fintech: Bitcoin and payment technologies overview and discussion	Velde, François R. “Bitcoin: A Primer” Chicago Fed Letter, No. 317 (December 2013).