“Should I Trust the Bank or the Social Movement?” Motivated Reasoning and Debtors' Work to Accept Misinformation

How can people believe corporate and state misinformation even if a social movement organization in their community has been countering this misinformation for years? Why do people knowingly accept misinformation without even being upset about it? I address these questions by analyzing ethnographic data and interviews with 84 Chilean low‐income housing debtors, whom, like many Chileans, are victims of financial misinformation. While the state and banks had significant agency in inducing the unproblematic acceptance of misinformation, debtors also played an active role in the processes. First, debtors had to decide whom to trust, which was not only a cognitive problem about evidence but also a behavioral and practical problem involving risks. Second, debtors engaged in “motivated reasoning”—affect‐driven biased information processing—to dismiss the possibility of being misinformed, to downplay the significance of misinformation, and to direct blame away from misinforming institutions. The latter two practices reduced debtors' anger about being misinformed. The findings have implications for studies of social movement framing and counterinformation, for the cognitive psychology of misinformation, and for the sociology and social psychology of acquiescence.     

INFORMATION,INSTITUTIONS, AND BANKING SECTOR DEVELOPMENT IN WEST AFRICA

Using a new West African panel data set, we provide evidence on the determinants of individual banks' loans and assets in some of the poorest countries in the world. Higher loan default rates reduce both the loans to assets ratio and the volume of assets. However, the size of these effects is sensitive to bank age and ownership structure. Younger, private, domestically owned banks are most affected, suggesting that such banks face the most severe informational disadvantages. Very old government‐owned banks benefit from high default rates. We also explore how the quality of governance impacts on loans and assets. (JEL G21, O16)     

Accumulating assets,debts in young adulthood: Children as potential future investors

Child Development Accounts (CDA) aim to open savings accounts in childhood as a way to lay a foundation for building assets in young adulthood and beyond. Mainstream banks may be key partners in opening the accounts in which children can build assets. While children may have limited savings to invest initially, they may increasingly invest over time by accumulating assets and debts through mainstream banks. Mainstream banks may benefit from children's increasing investments. This paper uses propensity score weighted, longitudinal data from the Panel Study of Income Dynamics and its supplements to examine savings, assets, debt, and net worth accumulation of young adults and whether or not they accumulate more when they have savings accounts as children. Young adults accumulate a median of $1000 in savings accounts, $4600 in total assets, $965 in debt (excluding student loans), and $4000 in net worth (excluding student loans). Young adults accumulate more savings and total assets when they have savings accounts as children. They accumulate less debt and more net worth when their households accumulate high net worth.     

INFORMATION COSTS AND THE ORGANIZATION OF CREDIT MARKETS: A THEORY OF INDIRECT LENDING

This paper explains indirect lending as a strategy for reducing a bank's cost of screening borrowers. Commercial banks appear to "ration" credit by rejecting some direct loan applicants, although they accept higher-risk borrowers who apply for loans indirectly through retailers. However, the more thorough credit check on direct loans causes applicants to sort themselves according to risk. Indirect applicants signal their higher risk through their choice of financing. Since banks gather more accurate information on direct applicants, the two types of contracts should differ in predictable ways. These implications are tested with Federal Reserve data on 5,000 automobile loans.     

FOREIGN BANKS AND THE BANK LENDING CHANNEL

We provide new evidence on bank ownership and transmission of monetary policy using bank‐level data on 453 banks in Central and Eastern European economies between 1998 and 2012. Only domestic banks adjust loans to changes in monetary policy, while foreign banks do not. Conventional wisdom says that this is because foreign banks can rely on parent banks' funding to insulate against monetary policy shocks. In this paper we document an alternative explanation. Deposits in foreign banks do not react to monetary policy, hence the bank lending channel is only triggered in domestic banks. (JEL E50, F36, G21)     

From Urban to Rural: Lessons for Microfinance from Argentina

The recent success of microfinance for the urban self‐employed contrasts with decades of failure on the part of public development banks for small farmers. This article describes the ways in which rural microfinance organisations have tried to adapt the lessons of urban microfinance to manage the risks and control the costs of the supply of financial services in rural areas. It then asks whether the lessons of urban microfinance are likely to apply in the poorest rural areas of Argentina. The article concludes that microfinance is unlikely to improve access to small loans and small deposits for many of the rural poor in Argentina; distances are too great, farmers too specialised, and wages too high. Improved access depends not on targeting loans by government decree but on strengthening institutions that support financial markets.     

The Price of Opportunity: Race,Student Loan Debt,and College Achievement

This paper examines racial differences in student loan debt and concurrently assesses the potential payoffs and countervailing risks inherent in reliance on loans in a cohort of black and white first‐year college students. Using the 1996–2001 Beginning Postsecondary Student study we find that the use of loans results in greater enrollment persistence and higher odds of college completion, especially for black students. However, black students acquire larger amounts of student loan debt and face a higher risk of default than white students. This is in part due to associated racial differences in family socioeconomic status and type of institution attended. We suggest these findings illuminate the dual‐sided nature of college loans that makes them an imperfect, but overall positive, tool for reducing educational inequality. On the one hand, student loans reduce educational inequality that otherwise results from disadvantaged students' struggles to pay for college and complete college in a timely fashion. At the same time, the degree to which loans reduce racial inequality is diminished by black students' higher loan amounts, the large number of black students who borrow but do not finish college, and the large racial difference in the odds of defaulting on a loan.     

Beyond "banking for the poor": credit mechanisms and women's empowerment

This article describes some strengths and limitations of credit programs for women in developing countries. It is urged that development planners recognize the importance of the selection of the type of credit mechanism in the long term. Ethical issues should be decided upon before the credit mechanism is operable. Organizations should make clear what level of commitment there is to empower borrowers. Most organizations give loans to women and assume empowerment will take place without devising strategies to ensure empowerment. Credit mechanisms include credit for the poor and credit by the poor. A sound financial portfolio and 100% repayment are not the appropriate criteria for securing the empowerment of women. Empowerment of women is related to "building the capacity of borrowers to manage and control decision making." UNICEF's framework of gender equality and women's empowerment identifies levels of empowerment as "welfare, access, conscientisation, participation, and control." Development planners should be aware that provision of credit also has the potential to increase a poor family's debt. Delinquency may be hidden by overlapping loans that trap borrowers. Fewer installment payments increase the chances of a debt trap. Reducing the number of installments may reduce administrative costs and conform to production processes, but may also lead to a debt trap. There is now considerable emphasis on investing in low-income women entrepreneurs as a highly efficient means of achieving social and economic objectives. Credit programs aim to support the growth of small, self-sustaining businesses, to improve women's opportunities, and to provide alternatives to exploitation by local money-lenders. This article describes the following credit mechanisms: bank guarantee systems, government credit schemes, intermediary projects, direct lending projects, banks for the poor, credit unions, and village-based banks.     

Boundedly rational banks’ contribution to the credit cycle

We investigate how banks’ boundedly rational learning influences their views about default risks over the business cycle. Our analysis details the direction and the magnitude of these effects assuming that banks update probability in a Bayesian way. With a limited experience span lenders are liable to overestimate (underestimate) losses from defaulting loans early (late) in the boom. Depending on their experience span, banks turn over-optimistic and underprice default risk 3–5 years into the boom. During recessions an overpricing of risk begins just quarters into the recession. Our simulations are calibrated with U.S. data and provide evidence for the view that banks contribute to excessive lending during the upswing and to credit crunches in recessions.     

Financing low-income housing in South Africa: Borrower experiences and perceptions of banks

South Africa is facing a low-income housing crisis, with the current backlog estimated at over three million units. An obstacle in the provision of low-income housing is the difficulty encountered by commercial banks to extend loans in this market despite supporting initiatives by Government. A lack of knowledge on the borrowing behaviour, preferences and experiences of low-income households in accessing housing finance from the commercial banking sector in South Africa hampers an understanding of the reasons for these problems. This paper's contribution is to provide information on the experiences and perceptions of low-income borrowers in the housing market of South Africa, specifically in their dealings with commercial banks. Results from a survey of 653 households across five provinces of the country are provided. In the survey, a structured questionnaire was used to obtain information on the experiences and perceptions of low-income households about their access to credit and housing finance, their experience of banks, the successes in credit approval, their judgements on the suitability of banks’ home-loan products, as well as preferences with regard to prices and interest rates.     

Chinese online fiction: taste publics,entertainment, and Candle in the Tomb

This paper examines the growing cultural trend of Chinese online fiction. Using Gans's twin concepts of taste culture and taste public, it looks at online fiction as a product of two taste cultures evident on the Chinese Web. The paper then explores the growing appeal of online fiction for consumers and producers (or readers and authors) in relation to two key issues: are there important differences between online fiction and print fiction? Is the participatory nature of online fiction leading to a reinvigoration of literary creativity in the Chinese-speaking world? The relationship between the consumer and the producer of Chinese online fiction can also be explored in terms of an attention economy, and the evolving market for this type of fiction provides an excellent example of how such an economy functions. The attention economy encourages competition for the attention of readers and consequently ensures that the values of the taste public consuming this fiction strongly dictate its content and its continued improvement as a form of literary production.     

Mastering authority: J.M. Coetzee’s Diary of a Bad Year

J.M. Coetzee’s fiction has, from its inception, parodied language which claims to speak as the public use of reason. Diary of a Bad Year departs from this position to some degree by offering a series of public reflections on the times; however, these reflections are embedded within a narrative structure which disallows us from taking them at face value. Such narrative framing raises the question of authority: not only the authority of the reflections themselves, but the authority of the voice and the voice in the text. The relationship between fiction and the public sphere is such that fiction foregrounds the problem of authority in public discourse and seeks to capture the position of authority through heightened forms of mimesis and self‐consciousness.     

Between “Families in Trouble” and “Children at Risk”: Historicising “Troubled Family” Policy in England since 1945

The launch of the Troubled Families Programme in 2011 has thrown into sharp relief how governments develop policies and practices to intervene in the lives of so‐called ‘troubled families’. Commentators were quick to make comparisons with historic efforts to rehabilitate ‘problem families’ in the post‐war period. However, beyond discursive similarities, there are also marked continuities in how family policies have been developed and implemented. This review narrates the rise, fall and rise of concern about ‘problem’ and ‘troubled’ families in England in the context of anxieties about child and family welfare, and the appropriate response of the state.     

Discovering parental drug dependence: silence and disclosure1

Children of drug dependent parents form a large and growing population at elevated risk of adverse developmental and social outcomes. In this study 36 children and young people described growing up in such families. Parents tried to shield children from exposure, however the majority of young people demonstrated a detailed awareness of their parents' problem with drugs whilst living with the parentally imposed fiction that drugs were not at the heart of their family dynamic. Children and young people are locked into a silence they find difficult to unburden to anyone. The policy imperative is recognition of the impact on children of living daily with parental drug dependence and means of ameliorating their living circumstances in ways that do not label them further.     

Power in Dayton: A Replication of the Bonjean Technique in a Medium Size City

Abstract

In recent years, the relationship between personal bankruptcy and stigma has generated much discussion and speculation. However, virtually no research has examined the experiences of bankrupt debtors themselves. In this paper, we provide an analysis of bankruptcy stigma based on thirty-seven in-depth interviews with 19 married couples who filed for personal bankruptcy in 1999. The data demonstrate that stigma is a pervasive feature of contemporary personal bankruptcy and that bankrupt debtors rely upon a wide range of stigma management techniques employed by other stigmatized groups. We conclude by considering the implications of our findings for continued research on personal bankruptcy in the U.S. and for understanding, more broadly, the strategies and struggles for social agency among stressed and marginalized populations.     

Sociology and Sisyphus: postcolonialism,anti-positivism,and modernist narrative in Patterson’s oeuvre

Theory and Society - This article argues that Orlando Patterson is a key contributor to postcolonial fiction and postcolonial theory as well as historical sociology and social theory, whose work...     

The Corpus Status of Literature in Teaching Sociology: Novels as “Sociological Reconstruction”

Using fiction in teaching sociology involves what Harvey Sacks calls “sociological reconstruction”. Numerous comments on teaching sociology provide advice and suggestions on the use of literature and “what counts” as “sociological” literature, including specific titles. This paper goes further: while the use of literature is a routine feature of sociological accounts, discerning the relevance of a novel, or a passage within a novel, to sociological themes is an analyst’s achievement. It requires work both by the teacher and the student to recognize the relevance of fiction to sociology. Previous studies on fiction in sociology focus on the pedagogic aspects of using novels but fail to acknowledge the key problem of “sociological reconstruction” attempted through the use of novels. The paper explicates the crucial and generic issue of “corpus status”, which is fore-grounded by the use of non-sociological materials in sociology.     

Education loans and wealth building among young adults

With the use of education loans growing rapidly as a way to finance college education, it is important to examine how such loans impact the future financial well-being. This study examines the association between education loans and postcollege wealth accumulation among young adults, the group with the greatest share of outstanding education loans. Data come from 15 rounds of data of the 1997 National Longitudinal Survey of Youth, and the analyses control for a number of student characteristics, college experiences, and parental income. Results from a treatment-effects model indicate that having education loans upon leaving college is negatively related to postcollege net worth, financial assets, nonfinancial assets, and value of primary housing. Furthermore, having education loans also has an additional negative link to the value of net worth among Black young adults. The relationship between the amount of education loans and wealth accumulation is not statistically significant among those with outstanding loans. The study findings indicate the importance of developing alternative approaches, instead of additional loans and other credits, to meet the financial needs of college students.     

Conversion to Islam: Narratives of Awakening,Continuity, and Return

Previous research utilizing conversion narratives to understand how and why people convert has been troubled by the “accuracy” of the accounts. This study of Muslim converts in the United States sidesteps this problem by turning the focus away from the causes, motives, and drivers of conversion and placing it instead on the form or structure of their conversion narratives. More specifically, it foregrounds the subjective process of making sense of one's conversion story through the employment of formulaic narrative structures. Findings suggest that when accounting for their conversion to Islam, these respondents employed three different narrative structures: stories of awakening, continuity, and return. Although these stories vary in meaningful ways, each provides a different perspective on how conversion to Islam can be conceptualized and expressed narratively. The discussion centers on the similarities and differences between these stories in order to more fully articulate and distinguish their underlying premises. I conclude by considering how each of these stories are used by converts to convey the authenticity of their Muslim identities.