Does the use of Buy Now Pay Later (BNPL) improve or worsen the short-term and long-term financial behaviors across generational cohorts in the US? In this study, we examine the effect of these innovative credit services on different financial behaviors.
The study uses nationally representative cross-sectional data from the 2022 Survey of Household Economics and Decisionmaking (SHED). To identify relationships, we employ propensity score matching combined with G-computation to estimate the Average Treatment Effect on the Treated (ATT) and entropy balancing as a robustness check.
The results indicate that BNPL usage is negatively associated with short-term financial behaviors but it has no statistically significant effect on long-term financial behaviors. These findings remain robust under counterfactual analysis using Average Treatment Effects on the Untreated (ATU) and Entropy balancing, strengthening the internal validity of the results.
This study is amongst the very few studies that examine the causal effect of Buy Now Pay Later (BNPL) on short- and long-term financial behaviors.
