Graduation Year

2026

Date of Submission

12-2026

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Peter Kelly

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2025 Ryunosuke M Nakase

Abstract

This thesis aims to answer three questions. 1) How does BNPL usage in the US respond to macroeconomic conditions reflective of consumer strength? 2) Does BNPL debt migrate toward credit cards during months following high BNPL spend? 3) How does BNPL respond to macroeconomic conditions at the firm level? I constructed a 4 year monthly and quarterly time series dataset spanning from 2021 to 2025. I utilize time series OLS regressions to examine the short-term behavior of BNPL volume monthly at the aggregate level and quarterly at the firm level. At the aggregate level, BNPL volume in the US is strongly associated with seasonality and moderately with consumer conditions. During the holiday season (November to December), an increase of 29.5% in BNPL volume is estimated. DPI and CPI yielded statistically significant results as regressors on aggregate BNPL volume, but the results were small in magnitude. Despite results from the existing literature, this thesis fails to provide evidence that BNPL debt migrates to credit cards. Months of higher BNPL volume did not have a statistically significant effect on aggregate revolving credit card debt. Instead, revolving credit card debt is associated with macroeconomic conditions, specifically changes in the bank prime rate and CPI. At the firm level, Affirm’s volume is associated with credit conditions and the labor market. A 7.6% increase in Affirm’s volume was estimated for every 1% increase in the credit card APR. This is consistent with the idea that BNPL and credit cards may act as substitutes depending on the price of credit. When the unemployment rate increased by 1%, a 15.5% increase in Affirm’s volume was estimated. Overall, these results suggest that BNPL at the aggregate and firm level are counter cyclical to macroeconomic conditions.

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