Consumption Response to Credit Expansions: Evidence from Experimental Assignment of 45,307 Credit Lines

In a field experiment that constructs randomized credit limit shock, participants borrow to spend 11 cents on the dollar in first quarter and 28 by third year. Effects extend those far from limit, who had new limits as available credit, with liquid asset buffer. short-run, flexible installment contracts are used tandem, unconstrained using installments more. Long-run borrowing is predominantly installments. Near limits, when expands but save out of constraints tight. Findings support buffer-stock interpretation emphasizing precautionary saving. (JEL C93, E21, G21, G51, O12, O16)