LOCATION

George Washington University School of Business
Duquès Hall, Room 651
2201 G Street NW (main entrance on 22nd Street between G and H Streets)

Bio: Geng Li

Geng Li is an economist and chief of the Consumer Finance Section at the Federal Reserve Board. In this capacity, Geng oversees and coordinates the research and analysis in areas of student, credit card, and auto loans and the related credit markets. In addition, the Consumer Finance Section is responsible for the G. 19 Consumer Credit statistical release, one of the Primary Economic Indicators. Geng’s research covers financial economics, credit markets, macroeconomics, and household economics in particular. He holds a Ph. D degree from University of Michigan, MA from University of New Mexico, and BA from Nankai University.

---

 

Abstract

This paper presents novel evidence on the role of credit scores in the dynamics of committed relationships. We document substantial positive assortative matching with respect to credit scores, even when controlling for other socioeconomic and demographic characteristics. As a result, individual-level differences in access to credit are largely preserved at the household level. Moreover, we find that the couples’ average level of and the match quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations. This result arises, in part, because initial credit scores and match quality predict subsequent credit usage and financial distress, which in turn are correlated with relationship dissolution. Credit scores and match quality appear predictive of subsequent separations even beyond these credit channels, suggesting that credit scores reveal an individual’s relationship skill and level of commitment. We present ancillary evidence supporting the interpretation of this skill as trustworthiness.