What influences demand for Buy Now, Pay Later credit?

Tao Chen; Ben R. Marshall; Nhut H. Nguyen; Nuttawat Visaltanachoti

doi:10.1016/j.econlet.2024.111857

What Influences Demand for Buy Now, Pay Later Credit?

Tao Chen, Ben R. Marshall, Nhut H. Nguyen and Nuttawat Visaltanachoti

2024 · Published in Economics Letters 242: 111857 · DOI 10.1016/j.econlet.2024.111857

PDF of What Influences Demand for Buy Now, Pay Later Credit? (Published version, open access)

In one sentence

In New Zealand, demand for Buy Now, Pay Later credit is higher among single, younger and lower-income people and falls when interest rates rise.

Summary

The paper studies the determinants of demand for Buy Now, Pay Later (BNPL) credit using a comprehensive New Zealand database, measuring demand both in absolute terms and relative to total personal lending demand. BNPL is more popular with single people, younger people and those on lower incomes. Both absolute and relative BNPL demand are negatively related to interest rates. Demand fell around changes to responsible-lending legislation, even though those changes were not specific to BNPL, and rose after COVID-19 lockdowns ended.

Abstract as published

We investigate the determinants of demand for Buy Now, Pay Later (BNPL) credit using a comprehensive database from New Zealand. We consider both absolute demand and relative to total personal lending demand. The results indicate that BNPL is more popular with single individuals, younger people, and those on lower incomes. There is a negative relation between absolute and relative BNPL demand and interest rates. BNPL demand was reduced during the period around responsible lending legislation changes, even though these were not specifically related to BNPL, while demand increased following the end of COVID-19 lockdowns.

Citation

Tao Chen, Ben R. Marshall, Nhut H. Nguyen, Nuttawat Visaltanachoti (2024). What influences demand for Buy Now, Pay Later credit?. Economics Letters, 242, 111857. https://doi.org/10.1016/j.econlet.2024.111857

BibTeX

@article{chen2024influences,
  title = {{What influences demand for Buy Now, Pay Later credit?}},
  author = {Tao Chen and Ben R. Marshall and Nhut H. Nguyen and Nuttawat Visaltanachoti},
  journal = {Economics Letters},
  year = {2024},
  volume = {242},
  pages = {111857},
  doi = {10.1016/j.econlet.2024.111857}
}