Extrapolative Beliefs and Financial Decisions: Causal Evidence from Renewable Energy Financing

Li An

<p>How do expectation biases causally affect households&rsquo; financial decisions? We exploit a unique setting and study the repayment decision in solar loans, in which households borrow to purchase and install solar photovoltaic (PV) systems. Electricity production &ndash; the benefit that solar panels generate &ndash; primarily depends on sunshine duration. This creates exogenous within-person across-period variation in recent signals that borrowers observe and thereby expectations of future electricity production. We find that a one-standard-deviation decrease in sunshine duration in the week right before the repayment date leads to a 22% increase of delinquency, even though deviated past sunshine duration does not predict that in the future. Survey evidence shows that agents make more positive forecasts of future electricity production after experiencing longer sunshine duration in the past week. We examine a battery of alternative explanations and rule out mechanisms based on liquidity constraints and wealth effects.</p>

2023-11-07 (Tuesday) 16:40-18:00

Room N302, Economics Building

English

厦门大学经济学院、厦门大学王亚南经济研究院、厦门大学邹至庄经济研究院

厦门大学经济学院、厦门大学王亚南经济研究院、厦门大学邹至庄经济研究院

系列讲座

Ming Gu

<div>Li AN is currently an associate professor at PBC School of Finance, Tsinghua University. Her research interests mainly lie in empirical asset pricing, behavioral finance, and household finance. One area of her research is to understand how investor behavior affects equilibrium price dynamics. Other themes include household portfolio choice, return anomalies, and investment management. Her research has been published in leading finance journals, such as Journal of Finance, Review of Financial Studies, Journal of Monetary Economics and Management Science.</div> <div>Li&rsquo;s research connects theory and practice and has been recognized by several academic and professional awards, including Crowell Memorial Prize by PanAgora Asset Management, Chicago Quantitative Alliance (CQA) Academic Competition, and Outstanding Scientific Research Award (Humanities and Social Sciences) issued by the Ministry of Education of the PRC.</div> <div>Li received her Ph.D. in Economics from Columbia University in 2014. Prior to that, Li graduated with the highest honor from Peking University with a B.A. in Economics and a B.S. in Mathematics.</div>

金融经济学系列讲座2023年秋春季学期第四讲(总108讲)