Presenter(s): Linmei Amaya – Economics
Faculty Mentor(s): Alfredo Burlando
Oral Session 1CS
Data Story Session 3S
Research Area: Social Science: Economics
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) is a federal law established in response to the recession of 2008. Mandates were created to increase credit responsibility for both creditors and recipients. A portion focuses on restrictions for young adults, which requires a cosigner for those aged under 21 and changes credit worthiness evaluation by considering individual income rather than household income. This study aims to investigate whether the restrictions decreased access to credit for young adults and whether the magnitude of the impact varied among demographic subgroups. The analysis uses individual data from the Panel Study of Income Dynamics, which uses an estimation sample from the Transitioning Adults Supplement. A difference-in-difference approach was used to estimate the impact on treated individuals (under 21) when the act went into effect and a control group (over 21). The propensity of owning a credit card was compared across the treatment and control groups. For preliminary results, we found that there was a 3% difference in credit card ownership between the groups but these results were not statistically significant. When comparing across subgroups, we found that white males were more likely to be restricted from access relative to blacks and other non-whites. The study will include further subgroups analysis and outcome indicators that could potentially be impacted from the hypothesized decrease in credit access. The overall implications of this study aim to address are the effectiveness of both credit legislation and a further analysis of credit market dynamics.