Abstract
This paper studies the determinants of households' unsecured credit limits by using the Survey of Consumer Finances data. We use instrumental variables of net worth for controlling the endogeneity issue that arises between an unsecured credit limit and net worth. The empirical results show that the wages or income of a household head is the most significant determinant of the household's unsecured borrowing limit. The credit limit increases as the mean of the rate of income growth increases or its volatility decreases. Home and business ownership, instrumented net worth or demographic variables exhibit a limited role in determination of the limit.
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