N°26-59: When the Job Opens Doors to Loans: Bank Employment, Loan Access, and Durable Spending

How is employment-linked access to formal credit associated with the level and composition of household expenditure? We study this question using the Iranian Household Income and Expenditure Survey for 2010-2023. Households whose head works in banking are substantially more likely to receive formal loans and obtain larger loan amounts than observationally similar households. We then use bank employment as an instrument for formal borrowing. Conditional on the instrumentalvariable assumptions, an additional unit of non-housing credit is associated with about 0.7 units of durable expenditure and 0.1 units of nondurable expenditure, revealing a pronounced durable-heavy spending response.