Illiquidity trap: Over-indebted subjects and their cognitive consequences

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Guillermo León Toro-García
https://orcid.org/0000-0002-0919-7327
Sandra Balanta-Cobo
Alexander Alegría-Castellanos

Abstract

This research aims to show the cognitive constraints experienced by resulting from financial concerns and problems. A case study was conducted involving eight individuals living in different Colombian cities, who got into debt and faced an insolvency process. The results obtained are consistent with the theoretical-empirical framework proposed by Mullainathan and Shafir (2013), regarding the cognitive strain experienced by individuals with feeling of scarcity. This work contributes to the existing empirical literature and represents a first
step toward the existence of a debt illiquidity trap that drives debtors to perpetuate their critical financial situation.

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How to Cite
TORO-GARCÍA, G. L.; BALANTA-COBO, S.; ALEGRÍA-CASTELLANOS, A. Illiquidity trap: Over-indebted subjects and their cognitive consequences. RAE - Revista de Administracao de Empresas , [S. l.], v. 64, n. 1, p. e2022–0445, 2023. DOI: 10.1590/S0034-759020240103. Disponível em: https://periodicos.fgv.br/rae/article/view/90409. Acesso em: 21 feb. 2024.
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Articles

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