Analysing Household and Intra-urban Variants in the Consumption of Financial Services: Uncovering “Exclusion” in an English City

This study provides an empirical assessment of the socioeconomic factors that determine household exclusion from consumer financial services. A unique microeconomic data set, of interview data, collected from a representative cross-sectional sample of 1005 households is analysed using logistic regression techniques. In investigating exclusion from consumer financial services, both financial self-exclusion and institutional-led financial exclusion are examined. Indicators of financial self-exclusion include the absence of a savings account or home contents insurance, whilst indicators of institutional-led financial exclusion include the use of “doorstep lenders.” Findings show that both measures of financial self-exclusion are determined by income, education, age, housing tenure, and social participation, whilst financial exclusion is generally associated with socioeconomic characteristics such as age, gender, housing tenure, working status, income, disability, and the presence of young people in household but not with respondents’ residential area, education level, internet use, and social participation. These results offer useful insights to policy makers and financial services providers in terms of the range and mix of policies and instruments that local and central Government can deploy to address exclusion.     

If You Build It,Will They Come? A Simulation of Financial Product Holdings Among Low-to-Moderate Income Households

The 1995 Survey of Consumer Finances was used to determine holdings of selected financial products by low-to-moderate income households, defined as households with incomes less than or equal to 80% of median household income for their region. First, we estimated determinants of holding bank accounts. Next, we estimated determinants of holding other selected products, contingent on holding a transaction account. Finally, we estimated the potential demand for these other products by households without accounts, should they become account holders. We found that if non-account holding households were to obtain accounts, they would increase their demand for credit cards, first mortgages, car loans, consumer loans, certificates of deposit, and IRA/Keogh accounts. The implications for financial institutions, policy makers, and consumer educators are presented.     

Pro-poor trade policy in Sub-Saharan Africa

This paper examines the presence of a pro-poor bias in the existing structure of protection of six Sub-Saharan African (SSA) countries, Burkina Faso, Cameroon, Côte d'Ivoire, Ethiopia, Gambia, and Madagascar. We build on a simple agricultural household production model and we propose an extension to include adjustments in labor income. Our approach, which can be implemented without repeated cross-sections of household level data, suits well the data constraints in SSA. It also allows us to capture the heterogeneity in trade protection at the tariff line level. The pro-poor bias indicators suggest that SSA's trade policies tend to be biased in favor of poor households, as these policies redistribute income from rich to poor households. This is because protection increases the agricultural prices of goods that are sold by African households and this effect dominates both the impacts of higher consumption prices and the strong Stolper–Samuelson effects that benefit skilled over unskilled workers.     

The determinants of households’ repayment difficulties on mortgage loans: evidence from Italian microdata

This article investigates the main determinants of households’ repayment difficulties on mortgage loans in Italy. We contribute to the empirical literature on household financial vulnerability by assessing the joint impact of socio‐demographic factors, loan characteristics and institutional variables on the likelihood of mortgage insolvency and on the intensity of arrears. Using data from the Italian component of the 2008 European Union‐Statistics on Income and Living Conditions (EU‐SILC) survey, we firstly identify which types of households are more vulnerable to unexpected adverse events that may trigger repayment difficulties. Specifically, households whose head is young, unemployed or immigrant show a higher probability of arrears and emerge as those suffering more from the adverse economic conditions connected to the crisis. Moreover, household repayment behaviour is affected by mortgage characteristics and, in particular, having modified contract terms significantly increases current arrears probability. Finally, regional institutional and credit market factors mainly impact on the conditional intensity of arrears. This evidence suggests that, although repayment difficulties mainly arise from a genuine inability to repay, households are less likely to pay on time when institutions are less effective at punishing default, confirming the existence of some strategic behaviour.     

Cherchez la Femme? Differential Validity in Models of Risky Household Financial Behavior

The purpose of this paper is to investigate whether the choice of household informant for psychological variables included in models of risky household financial behavior matters to the empirical researcher. Five research hypotheses are posited in relation to this purpose, which concentrate on evaluating results from different correlation and regression analyses based on behavior measured at the household level, but with psychological data drawn from either the family financial officer (FFO) or the spouse in family households (N = 807). A sample of one-person households from the same database was used as control group (N = 211).It could not be shown directly that the amount of explained variance differed significantly between multiple regression analyses, in which the psychological data were drawn from different informants. However, other tests and analyses strongly indicate that including FFO data increased the validity of the model, while the inclusion of spouse data gave a marginally positive, albeit statistically significant, effect. The interpretation of the model also differs when different informants' data are used. One-person household data used to estimate an identical model seemed to produce a better fit than family household data. Finally, measures of "couple" variables showed stronger agreement between spouses than "individual" variables. Zero-order correlations between psychological variables and measures of risky financial behavior differed significantly between spouses in a few cases.The implication is that in this behavioral domain, psychological data must be collected from the family financial officer, while the spouse can be excluded without any severe consequences. This will also reduce the need to eliminate households from the analysis because of partial non-response.     

Debt as a source of financial stress in Australian households

This paper examines the role of demographic, socio‐economic and debt portfolio characteristics as contributors to financial stress in Australian households. The data are drawn from the most recent Household Expenditure Survey and relate to 3268 probability‐weighted households. Financial stress is defined, among other things, in terms of financial reasons for being unable to have a holiday, to have meals with family and friends, to engage in hobbies and other leisure activities, and general money management. Characteristics examined include family structure and composition, source and level of household income, age, gender and marital status, ethnic background, housing value, debt repayment of various types and credit card usage. Binary logit models are used to identify the source and magnitude of factors associated with financial stress. The evidence provided suggests that financial stress is higher in families with more children and those from ethnic minorities, especially when reliant on government pensions and benefits, and lower in families with higher disposable incomes and housing values. There is weak evidence that Australia's historically high levels of household debt cause financial stress.     

The Way into Bankruptcy: Market Anomie and Sacrifice Among Portuguese Consumers

Portugal ranks among the EU27 countries with higher levels of consumer indebtedness. Contrary to the trend observed in countries with similar indebtedness rates, Portugal has one of the lowest rates of consumer default. Previous studies (e.g., Frade et al. 2006) have identified three strategies that have contributed to keep levels of credit default low: reliance on savings, financial support from relatives and friends, and cuts in household expenses. These strategies have been widely used for the last decade and have been strained since the very beginning of the global financial crisis in 2007. We argue that these three strategies are near to collapse and consequently the levels of consumer default will rise steeply in the next years. The savings rate in Portugal has been declining over time, and the social networks are limited in their action due to the current crisis that affects everyone. In this article, we advance the hypothesis that sacrificing living standards is rooted on collective beliefs about the current economic crisis in Portugal and trust in political and market agents in line with the Theory of Market Anomie (Karstedt and Farrall 2006). The conclusions are based on macroeconomic statistics and on the results of a Web survey of 1244 Portuguese households, which focuses on attitudes towards the financial crisis, trust in political and economic institutions, and strategies to cope with the crisis. The results show that trust in financial companies (banks and insurance companies) and in the European Parliament promotes a sense of empowerment to contribute to the country economic restoration. This attitude induces citizens to avoid default by sacrificing living standards. But in the current austerity context, with low levels of trust in political institutions and detachment of the economy, consumers will be less prone to sacrifice. In this scenario, credit default and insolvency is expected to rise especially in those households most exposed to unemployment and to cuts in social benefits. This reality puts a huge and growing pressure on bankruptcy procedure, civil courts, and economic and social policies. Some adjustments should be made to the Portuguese Bankruptcy Code by facilitating and simplifying the bankruptcy regime in order to accommodate the increase in insolvency cases. But the improvement of the insolvency procedure will not resolve the situation of financial distress if the structural causes persist, such as unemployment and deterioration of salaries, and cuts in social benefits. A reform of the Bankruptcy Code facilitating and simplifying the bankruptcy regime should be coupled with measures that boost the economy and stimulate the labour market. Otherwise, Portuguese households will not have the resources necessary to benefit from the bankruptcy process and regain the control over their financial lives.     

Determinants of the Demand for Home Equity Credit Lines

From the Survey of Consumer Finances conducted in 1989 and 1992 a logit model was tested for demographic and financial influences on household decisions to utilize home equity line credit. Results indicate that among households with credit lines other than credit card lines or business lines, the choice of a home equity credit line in lieu of another type of check credit line is influenced principally by percentage of equity in the home, income, net worth, age of the borrower, and credit price. Several implications may be derived from this study. As the markets reflect more complete information about the low-risk attributes of this credit, the convenience as a payment mechanism, and the tax subsidy to homeowners, it is expected that home equity credit lines users will be distributed more evenly across income and wealth categories.     

Firm exit after distress: differentiating between bankruptcy, voluntary liquidation and M&A

This paper examines firm-level determinants of mature firm exits after economic distress. Using nested logit models and a sample of 6,118 distress-related exits in Belgium, we analyze the type of exit that distressed firms experience. We show that 41% of the firms in our sample exit through a court driven exit procedure (mainly bankruptcy), 44% are voluntarily liquidated and 14% are acquired, merged or split (hereafter M&A). Distressed firm exit follows two distinct stages. First, a firm either decides to exit voluntarily or is forced into bankruptcy, which is the least efficient exit strategy. Compared to bankruptcy, the probability of a voluntary exit increases with higher levels of cash, lower leverage, holding no secured debt and being embedded in a group. If a firm exits voluntarily, it enters a second stage and decides either to exit through voluntary liquidation or through a M&A. Conditional on not going bankrupt, the likelihood of voluntary liquidation compared to M&A increases with higher levels of cash or secured debt, with smaller size and with an absence of group relations. We contribute to the firm exit literature by jointly analyzing three exit types and showing that bankruptcy and voluntary liquidation are fundamentally different exit routes. While voluntary liquidation is an important exit route for distressed firms, most previous studies have failed to distinguish between bankruptcy and liquidation. We hence contribute to the exit literature by showing that bankruptcy, voluntary liquidation and M&A are fundamentally distinct exit routes for distressed firms, driven by different firm level characteristics and following a two-stage process.     

Presence of children and household food expenditures at home and away from home

Households with children spend more on food at home than do households without children. On the other hand, compared with households without children, households with children who are at least 12 years of age are associated with higher expenditures on food away from home expenditures. Households with employed spouses are associated with lower expenditures on food at home. Other determinants of expenditures on food at home are seasonality, house ownership, region, household size, education, age and income. House ownership, region, household size, race, education and income also affect expenditures on food away from home.     

International comparison of household asset allocation: Micro-evidence from cross-country comparisons

Asset allocation, an important part of household finance, attracts constant attention across countries. Due to the differences between countries, asset allocation presents different characteristics in various countries. This paper compares and analyzes the differences in household asset allocation around the world based on the data of 23 developing and developed countries, such as China, the United States, 20 EU countries, and Australia, at the micro-level. This paper finds that in all of these countries, except for the United States, housing assets often occupy a large proportion of household total assets, which we give the name ‘Valuing Housing’, mainly attributed to the high housing value-to-income ratios (especially in developing countries). Further analysis shows that, with the increase in household income, the proportion of housing assets in most countries presents an inverted ‘U' shape, which first increases and then decreases, and where the inflection point appears in the top 20% of households. Also, with increases in income, China, the United States, and some other countries see an increasing proportion of financial assets. The top 20% of households tend to invest in financial assets. In addition, as the ages of household heads increase, the proportion of housing assets tends to first rise and then level off, and that of financial assets tends to first decrease and then level off. The conclusions of this paper help to better understand the differences in the allocation of household assets across countries and explain the underlying causes.     

Price of privacy: Selling consumer databases in bankruptcy

This article analyzes whether bankrupt Internet companies can sell consumer database information in their attempts to pay off creditors as mandated by Chapter 7 and Chapter 11 bankruptcy protection law and provides guidance to solvent e-commerce companies in regard to their privacy policies. Database sales in bankruptcy are in conflict with most companies’ own posted privacy policies and, therefore, have been contested. The question pits the commercial interests of creditors, which have as their advocates bankruptcy court judges, against the privacy interests of consumers, who have found allies in state attorneys general, privacy groups and foundations, and the Federal Trade Commission (FTC). With no clear law preventing them, bankruptcy trustees have attempted to sell the databases. Ultimately they agreed not to sell by settling claims filed by the FTC and attorneys general. There is no law specifically prohibiting such sales, and until specific legislation is passed, bankruptcy court judges will continue to be left to rule on a case-by-case, even a motion-by-motion basis, interpreting the United States Code to the best of their ability. Their options are outlined and discussed.     

浙江省农民收入增长影响因素分析 ——基于CHFS调查数据

缩小城乡收入差距并研究其影响因素,是实现乡村振新战略的必然要求。利用中国家庭金融调查中心数据,对农户收入影响因素进行实证分析。发现耕地市值、劳动力数量、受教育水平、金融素养对农民收入增长起到较显著的正向影响;而农村家庭持有金融资产以及年龄对其总体收入增长起到负面影响,其负作用一定程度上来源于农户金融素养匮乏所导致的家庭资产结构配置不合理。应该持续推进农村居民素质教育工作,促进家庭资产的合理配置,应对快速发展的复杂金融市场所带来的金融风险,进一步有效促进农民合理增收,缓解城乡收入差距过大等问题。     

The increasing financial obligations burden of US households: who is affected?

The purpose of this paper is to examine factors associated with changes in the proportion of households with high financial obligations ratios in the United States. The proportion of households paying more than 40% of income for debt, rent, vehicle leases, property taxes and homeowners’ insurance, which we refer to as having a heavy burden, increased from 18% in 1992 to 27% in 2007. Multivariate analysis of a combination of six Survey of Consumer Finances data sets indicates that the likelihood of having a heavy burden was positively associated with homeownership, self‐employment and retirement status. Those with an optimistic 5‐year expectation of the economy were more likely to be in a household with a heavy burden. Education was positively related to having a heavy burden, suggesting that having a heavy burden is not simply a cognitive error.     

企业集团财务危机的"溢出效应"与大股东的支持行为

在剖析企业集团财务风险的成因和传导机理的基础上,考察影响集团成员企业陷入财务危机的概率及其外溢成本的相关因素,实证结果表明集团成员企业陷入财务危机,确实给关联成员企业带来负面的外部性影响,而大股东的资金支持行为对控制集团内部财务风险的蔓延有积极作用,可以减少成员企业发生财务危机的概率。     

Financial capability and emergency savings among South Africans living above and below the poverty line

Emergency savings provide a buffer against financial shocks, particularly among low‐income households. Despite the importance of these funds in lessening financial hardship, many households have not set aside emergency funds. It has been suggested that financial capability may play a role in financial behaviour. Therefore, this study considers whether financial capability is associated with saving for emergencies and whether there are differences in factors that predict emergency savings behaviour among those living below and above the poverty line. Using data from a sample of South Africans, logistic regression is used to determine the predictors of emergency savings. The study finds that those with higher levels of financial capability, related to financial self‐efficacy and having access to a bank account, are more likely to have emergency savings compared with those with lower levels of financial capability. However, no evidence is found to suggest a relationship between objectively measured financial knowledge and emergency savings. Therefore, the findings suggest that self‐assessed financial ability, as measured by financial self‐efficacy, might be more important than objectively assessed ability in the context of individuals making responsible financial choices. Differences in the predictors of emergency savings for those living above and below the poverty line related to socioeconomic and demographic differences, whereas the same financial capability predictors were significant predictors in both samples. The study provides unique insights into the predictors of emergency savings in a developing market context and identifies the characteristics of those who are likely to be financially resilient to unexpected economic shocks. The importance of the broader financial capability construct in predicting emergency savings, for both those living above and below the poverty line, suggests that programmes aimed at encouraging emergency savings should focus on enhancing financial self‐efficacy and financial inclusion.     

较发达地区农户参与农信社小额信贷程度的影响因素分析——基于苏北金湖农户“直接意愿”调查的实证检验

结合农户借贷行为特征,采用江苏省金湖县273个农户实地调查数据,通过基于"直接意愿调查法"的二元Probit模型,从需求和供给两方面实证分析中国较发达地区农户小额信用贷款的现状及影响因素,结果显示,外出务工人数、农村家庭大额非日常支出、农户人际关系的强弱和正规社会资本资源显著影响农户小额信贷的需求,而非农收入比重、农户兼业类型及地区人均贷款显著影响农户获得小额信贷的概率。因此,重视和挖掘农户潜在信贷需求,改进信贷产品服务和质量,满足农户多样化的资金需求,才是实现农村小额信贷的可持续发展之道。     

Consumer bankruptcy in Utah (USA): who files and why?

This study examined consumer debtors who filed for bankruptcy and their reasons for filing in Utah, the U.S. state that ranked first in household filing rate in 2002–2004 and consistently ranks in the top ten of the 50 states. The purpose of the study was to determine the demographic characteristics of debtors and reasons for filing. Data were collected during 2004–2005 via survey from 508 debtors. The debtors reported employment problems, medical expenses, divorce or other family problems, as well as trouble managing their finances and overuse of credit cards. More than half of the debtors owed medical providers. Debtors were more likely to report a reduction in income than job loss. Self‐employed persons were over represented. Respondent debtors are less educated, less likely to be married and less likely to own a home compared with Utahns and other Americans. Contrary to expectations, debtor households were smaller than the state average, which may be due to the young age of debtors. Results suggest that in order to reduce the bankruptcy rate in Utah, consumer educators should target renters, adults with less than a college education, divorcing persons and small business owners. Utah's mandate for a personal finance graduation requirement should be implemented early in the secondary school curriculum.     

The effect of marital status,income, age and other variables on insolvency in the U.S.A.

The prodiction of insolvency among U.S. households was the focus of this study with the use of data drawn from the Surveys of Consumer Finance^1.2 which were sponsored by the Federal Reserve Board of Governors. Analysis of panel data for a random sample of 1,934 households showed that age of the household head had a negative relationship with insolvency while income had a strong, negative effect. In the first period (1983), married couples had lower predicted insolvency rates than other household types. In the second period (1984), the relationship between marital status and insolvency was not as clear, but married couples with children had substantially lower predicted insolvency than did single-parent households.