Perceived Precautionary Savings Motives: Evidence from FinTech

Abstract

In a representative sample of new borrowers, access to digital lines of credit increases the spending of consumers with ex-ante higher savings rates (liquid consumers) permanently. After access to the line of credit, these consumers reduce their existing savings rate but do not tap into negative deposits and hence do not raise debt. Through our FinTech bank setting, we can elicit consumers' risk preferences, beliefs, perceptions, and other characteristics directly. Common theoretical determinants of precautionary savings motives do not differ systematically across liquid and illiquid consumers but liquid consumers have higher subjective beliefs about the need for precautionary savings nonetheless.