ILLIQUIDITY TRAP: OVER-INDEBTED SUBJECTS AND THEIR COGNITIVE CONSEQUENCES

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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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APA

Toro-García, G. L., Cobo, S. B., & Castellanos, A. A. (2024). ILLIQUIDITY TRAP: OVER-INDEBTED SUBJECTS AND THEIR COGNITIVE CONSEQUENCES. RAE Revista de Administracao de Empresas, 64(1). https://doi.org/10.1590/S0034-759020240103x

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