Consumer Finance

Abstract

Although consumer finance is a substantial element of the economy, it has had a smaller footprint within financial economics. In this review, I suggest a functional definition of the subfield of consumer finance, focusing on four key functions: payments, risk management, moving funds from today to tomorrow (saving/investing), and from tomorrow to today (borrowing). I provide data showing the economic importance of consumer finance in the American economy. I propose a historical explanation for its relative lack of attention by financial economists and in business school curricula based on historic geographic and gender splits between business and consumer studies. I review the literature in consumer finance, organized by its focus on the consumer, financial institutions, and the government. This work is spread out between economics, marketing, psychology, sociology, technology, and public policy. Finally, I suggest a number of open research questions.