FIN450 Consumer Finance (Spring Semester 2016)



The course gives an introduction to the field of consumer finance, which covers the use of financial instruments by private households. Financial decision making is among the most important but also the most complex problems individuals face these days. Topics include both investing decisions and credit decision of consumers, highlighting several influencing variables such as cognitive abilities, financial literacy, age, and experience. Another emphasis will be on retirement savings with coverage of savings programs, annuities and retirement consumption. Finally, the interaction of the consumer with his peers and financial intermediaries such as advisors will be discussed.
The course corresponds to 3 ECTS credits. Course language is English.

Learning outcomes:

  • The course provides an overview of the research field of consumer finance with regards to current research topics and methodology used
  • Students learn to integrate interdisciplinary views from finance, economics, psychology, and behavioral sciences
  • Students acquire the ability to deal with scientific research papers, to interpret their results and to identify critical points
  • The course introduces institutional features of savings products and retirement systems in different countries


Formal:  None              

Recommended: Students are assumed to have undergraduate level knowledge of finance and economics (e.g. FIN 301, ECO 302). Some basic knowledge of statistics/econometrics is useful to understand empirical research conducted in the research papers, which the course content is based on. A sufficient level of spoken and written English language skills is necessary.

Further Details:

LecturersDr. Christoph Merkle
TimeFridays, 10:15 - 11:45 (B2)
Language of InstructionEnglish
Course starts onFebruary 19th



Materials will be uploaded to the Ilias course "FIN 450 Consumer Finance"

Recommended Reading:

  • Campbell (2006): Household Finance, Journal of Finance, 61(4), 1553-1604.
  • Tufano (2009): Consumer Finance, Annual Review of Financial Economics, 1, 227-247.
  • Badarinza, Campbell, and Ramadorai (2016): International Comparative Household Finance. Annual Review of Economics, 8(1), forthcoming.
  • Further Readings
    Agarwal and Mazumder (2001): “Cognitive Ability and Household Financial Decision Making”, Working Paper.
    Bhattacharya, Hackethal, Kaesler, Loos, and Meyer (2012): “Can Unbiased Financial Advice Steer Retail Investors Towards Efficient Portfolios? Answers from a Large Field Study”, Review of Financial Studies, forthcoming.
    Benartzi and Thaler (1995): Myopic loss aversion and the equity premium puzzle, Quarterly Journal of Economics, Vol. 110, 73-92.
    Benartzi and Thaler (2004): “Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving”, Journal of Political Economy, Vol. 112(S1), S164-S187
    Hong/Kubik/Stein (2004): Social Interaction and Stock‐Market Participation, Journal of Finance, 59(1), 137–163
    Kaustia/Knüpfer (2008): Do Investors Overweight Personal Experience? Evidence from IPO Subscriptions, Journal of Finance, 63(6), 2679–2702.
    Scharfstein and Stein (1990): Herd Behavior and Investment, The American Economic Review, 80 (3), 465-479.
    Sirri and Tufano (1998): Costly Search and Mutual Fund Flows, The Journal of Finance, 53, 1589-1622.


Determinants of financial decision making
Investor Experience
Stock market participation
Mutual fund investments
Credit decisions
Exercise Session
Social interaction
Financial Advice
Retirement Savings I
Retirement Savings II
Exercise Session