Approximately 75 participants attended the conference, which included six research papers on topics such as liquidity constraints, the rise in bankruptcy, and the financial mistakes made by credit card holders. In this article, Mitchell Berlin summarizes the papers presented at the conference.

In his opening remarks at the conference, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, noted that innovation in electronic payments has led to major changes in the financial industry. The process of innovation has allowed new entrants into the industry, expanding the availability of consumer credit and permitting more opportunities for smoothing consumption over time. Plosser reminded conference participants that rapid growth in innovation often leads to excesses and mistakes and that progress is necessarily uneven. He stressed that the Fed’s mandate is to evaluate innovations in the context of economic efficiency, effective monetary policy, and an efficient payments system. This mandate provides the rationale for this conference, which brought together researchers whose papers address fundamental issues about consumer credit.

This article appeared in the First Quarter 2008 edition of Business Review.

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