Debt Behavior Research Articles

Firm Exit During Recessions

We analyze a general equilibrium model of firm dynamics to study the effects of shocks to productivity, labor wedge, and collateral constraint (credit shock) on firm exit. We find that only the credit shock increases firm exit. This result is robust to the magnitude of shocks and different model specifications. Calibrating the model to match the behavior of output, employment, and firm debt during the Great Recession (2007-2009) in the United States, we find that the credit shock accounts for the observed rise in firm exit and its concentration among young firms. Furthermore, it accounts for 20 percent of the drop in output and employment.

Debt and International Reserves in Emerging Markets: Output Externalities or Precautionary Savings?

We study the joint behavior of external debt, international reserves, and the real interest rate based on a dynamic regime-switching small open economy model that incorporates the salient features of economic crises in emerging markets. Our model allows an assessment of the two well-known motives behind reserve accumulation: output externalities and precautionary savings against sudden stops. Using data from 24 emerging countries from 1970 to 2017, we estimate the model and show that both motives matter in many of our sample countries, with international reserves serving as an instrument to sustain higher levels of output and insure against disruptions from crises. The model is quantitatively successful at matching various aspects of the data that exhibit substantial variation across these countries. We also demonstrate that the contribution from output externalities is heterogeneous in direction and magnitude, which informs the debate concerning the two motives in the literature.

PENDEKATAN INKLUSI KEUANGAN DAN TEORI PERILAKU TERENCANA DALAM ANALISIS PERILAKU UTANG

Debt behavior in daily life is not new; debt behavior is almost as old as human civilization because it has been detected since 3200 years BC. Until now debt behavior has become a trend in modern household life for a variety of reasons, therefore household debt behavior still has an appeal for a research study. The purpose of this study is: to test debt behavior with a financial inclusion approach and theory of planned behavior. Method: using the method of nonprobability sampling and purposive sampling, household units were sampled as many as 390 respondents with population areas of Pekanbaru City, Indonesia. The analytical tool used is SEM-warp PLS version 6. Findings: that TPB with three main elements namely behavioral attitudes, subjective norms and behavioral control can predict intentions and behavior of household debt, financial inclusion can then have a strong positive influence on debt behavior household. Conclusion: debt used as alternative income can smooth consumption, improve the quality of life and welfare in the household, but debt remains a burden and an obligation that must be paid by the household

Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process

Literature shows that parental financial socialisation plays an important role in attaining financial literacy as well as in shaping sustainable financial behaviours and that both translate into increased well-being indicators and financial security on micro- and macroeconomic levels. However, debt literacy and debt behaviour seem to be unique. Very little is known about the childhood financial socialisation process through which adults’ sustainable debt behaviour is shaped and how debt behaviour may affect well-being. This study tests a hierarchical model of childhood financial socialisation consisting of five levels: the anticipatory parental socialisation, and later life financial learning outcomes (particularly, debt literacy levels), financial attitudes, debt behaviour, and well-being. Using data collected from a purposive sample of young adult Poles (N = 600) during the period from 10 to 13 November 2018 and employing structural equation modelling, we have found evidence confirming the hierarchical relationship of literacy–attitude–behaviour. Our data do not support, however, either the hypothesised positive relationship between parental socialisation and objectively measured debt literacy or the assumed relationships between debt behaviour and well-being indicators. We posit that country-specific factors related to generational differences entailed by system-wide transition and the specificity of debt behaviour, respectively, are key for explaining these empirical deviations from the assumed conceptual framework. Finally, we found no significant differences between the models estimated separately for maternally conditioned and paternally conditioned respondents.

An Empirical Analysis of Household Debt Behavior Determinants

This study identifies the determinants of debt behaviors and their effects on household consumption. We surveyed households in Riau, particularly in Pekanbaru and its neighboring areas, using purposive sampling and collected 390 useable responses. Our findings show that of the ten determinants considered, debt behavior can be explained by five determinants: (i) imitated lifestyle and consumerism, (ii) ability to manage money from debt, (iii) effects of promotion on the internet and visual media, (iv) monthly income, and (v) increasing household expenses and dependants. Implications of the findings are discussed.

Research on the Impact of Fiscal Transparency on Local Government Debt Risks：Based on the Perspective of Intergovernmental Relations

Under the general work guideline of making progress while maintaining stability, the importance and concern of local government debt risk issues are increasing. In order to alleviate the local government debt crisis, the central government has issued a number of important documents. Due to the active and continuous borrowing motives of local governments and the tendency to conceal debt behavior, the central government’s top-down” macroeconomic control measures have little effect. Fiscal transparency is a broad bottom-up” public monitoring tool that can effectively promote public supervision and restraint on government behavior. It has a positive and effective effect on controlling corruption, improving government credibility, and reducing debt risks.Firstly, this paper constructs a theoretical model based on game theory. The theoretical model uses the motive of local governments as the entry point to analyze how fiscal transparency will restrict local governments’ illegal debt-raising behavior. The results of the theoretical model show that: （1）With a single local government as the main player of the game, the increase in fiscal transparency will increase the expected cost of local governments’ illegal borrowing, thereby reducing the amount of illegal debt.（2）Taking two representative local governments with competitive relationship as the main players, the increase of fiscal transparency has a controlling effect on the illegal borrowing caused by inter-governmental competition. As the degree of fiscal transparency increases, the competing government will abandon the illegal way of borrowing and instead choose the legal way of borrowing.（3）With the central and local governments in the context of Paternalism” as the main players, the improvement of fiscal transparency can strengthen the central government’s commitment to not help local governments, and encourage local governments to actively converge on illegal debt-raising in order to avoid the debt crisis.Secondly, this paper constructs an empirical model based on provincial panel data to analyze the external performance” of the impact. The results of the study show that: （1）Improving fiscal transparency can effectively reduce local governments’ illegal borrowing impulses.（2） Political tournaments” and soft budget constraints” will exacerbate local governments’ debt impulses. In this context, improving fiscal transparency can effectively curb local governments’ debt impulses.（3）Improving fiscal transparency can encourage local governments to optimize their debt structure and optimize the bond issuance process.In the context of the current wide-ranging concern of local government debt problems, this paper aims to study the problem of local government debt risk control from the perspective of improving fiscal transparency. This paper provides new ideas for controlling local government debt risks, and also provides useful enlightenment for effectively promoting China’s fiscal transparency.

Impact of Actual Interest Rates on the Debt Stock of Private Sector

The purpose of this study is to analyze the dynamics of the private sector’s debt stock in the context of interest rate changes and to assess the corresponding changes in macro-financial parameters. The private sector is structured into two groups—nonfinancial corporations (business) and households (population), for each of which, along with the changes in interest rates, other factors of debt behavior are analyzed. The study includes Russia, the United States, France, Germany, and Finland1. The values ​​of an actual credit rate are calculated, its dynamics are compared with the dynamics of the statistical indicators of the average credit rate. When analyzing the dynamics of credit debt, the changes in a nominal volume of debt and a volume of payments for debt servicing are taken into account, and the net increase (decrease) in the debt stock is calculated.

Debt Holding and Subjective Wellbeing: Borrowing Source and Income As Moderators

The objective of this study is to examine the association between debt holding and subjective wellbeing using data from China. In recent years, consumer credit markets have been emerging and Chinese households have started to borrow for consumption. Some statistics show warning signs that Chinese households may borrow too much that could affect the economic stability. Research on debt behaviour of Chinese households is important for the wellbeing of both households and economy in China. Research questions of this study are: 1) Are debt holdings associated with subjective wellbeing; 2) Do borrowing sources and income moderate the association between debt holding and subjective wellbeing? Data used in this study is from the 2016 China Family Panel Study that is nationally representative. Subjective wellbeing was measured by two indicators, life satisfaction and stress. Multivariate linear regression results suggest that holding housing debt, non-housing debt, or both is associated with lower life satisfaction or higher stress after controlling for socioeconomic variables. In addition, borrowing sources and income show some moderation effects on the relationship between debt holding and subjective wellbeing. Results suggest that debt holding may decrease life satisfaction and increase stress. Helping consumers take control of debt may enhance their subjective wellbeing and improve quality of life.

THE EFFECT OF FINANCIAL INCLUSION AND BANKING BEHAVIOR ON HOUSEHOLD DEBT BEHAVIOR

This study aims to examine the effect of financial inclusion from the dimensions of access, user, quality, wealth on bank behavior and debt behavior and the indirect influence of each dimension of financial inclusion on bank behavior and household debt behavior. With population areas and samples in the city of Pekanbaru, Riau, Indonesia.The research focused on the demand side in banking services, namely consumer credit services to households. Using a purposive sampling method with a total sample of 303 household units in the city of Pekanbaru.The analysis tool used in the study was SEM-WarpPLS version 6.From this study the authors found that access, user, quality, wealth had a positive effect on the behavior of household debt, then the authors found that access, user, quality had a positive effect on bank behavior, then found that access, user, quality, wealth had an indirect positive effect towards debt behavior through mediating bank behavior.It was concluded from this study that the behavior of banks as mediating variables can reduce the direct influence of financial inclusion on the behavior of household debt.

Determinants of credit card spending and debt of Chinese consumers

PurposeThe rapid growth of credit card use in China poses the potential for card overuse and the accumulation of increased debt. The purpose of this paper is to report on an investigation into the determinants of overall credit card spending and card-financed debt by Chinese consumers.Design/methodology/approachThis study focusses on two dependent variables: credit card monthly spending and card debt. The spending measure is based on consumer outlay for the month preceding the survey. Card debt is the consumers’ outstanding credit card debt when the survey was conducted. Three groups of independent measures are used: socio-demographic characteristics, card features and consumer attitude towards money. Both card spending and card debt are estimated with OLS methods. Data was obtained from the 2013 China Household Finance Survey of 1,920 households in 29 provinces and 262 counties across China that used credit cards over the survey period.FindingsThe empirical findings suggest consumers’ attitude towards money is more important in explaining card spending and debt variation than socio-demographic characteristics and card features. The credit limit set for a card, obligations to other loans and the method of paying for ordinary shopping exhibit positive effects on both card spending and card debt, while age exhibits a negative effect. Further, card spending is positively correlated with card debts, but the factors that determine card spending do not necessarily affect card debt and vice versa. Minimum card debt payments, cash advances, card tenure and interest-bearing debt have no effect on card spending but have positive effects on card debt. In addition, gender and income have opposite effects on card spending and debt.Practical implicationsThe relationships we have documented suggest several actions the Chinese Government could consider dealing with credit card debt risk. Controlling the aggressive promotional campaigns that card issuers use to attract consumers and aggressive credit policies should be a focus of attention. The Chinese Government might, for example, impose minimum age and income requirements for granting credit cards and prohibit issuance of new cards to applicants who are already in debt with other types of credit. In addition, more stringent criteria to curb increases in card limits and tighter control over cash advances made on cards should be applied. Minimum payment amounts can also be increased in order to reduce credit card debt risk.Originality/valueDespite ample documentation of consumers’ credit card behaviour, the literature is deficient in at least two areas of enquiry. First, most previous research has investigated either credit card spending behaviour or card debt, but not both. Second, with few exceptions, most research has investigated a range of specific factors that affect credit card use. In contrast, this study investigates card spending as well as card debt behaviour using a wide variety of consumer dimensions particularly relevant to credit card use and resulting debt. In addition, this study focusses on Chinese consumers, who traditionally prefer to save first and delay spending. The impact of the rapid growth of credit card use on this traditional Chinese orientation towards spending is dynamic. Documenting the influence of the individual factors examined in this study is likely to be of value to both policy makers and institutions that offer and manage credit in this changing environment.

THE INFLUENCE OF SELF-ESTEEM AND SOCIAL RELATIONSHIPS TOWARDS THE DEBT BEHAVIOUR

Debt culture is considered synonym amongst the low income household group. There are researches that indicate that loans amongst the low income household group, is not only with the purpose of fulfilling basic needs, but also for higher needs. If we explored from the hierarchy needs that introduced by Maslow (1954), there are five levels of needs required to be fulfilled, including social needs and self-esteem. According to the Maslow theory, individuals who can fulfill all of their needs is considered a healthy person, whereas those who are unable to fulfill their needs is at risk of being unhealthy or maybe sick in the human dimension. Therefore,humans in their effort to fulfil needs and desire would always find the best solution, even if they have to be in debt. Due to the passing of time, being in debt to fulfill a higher need is considered to be fair. Therefore, this research is conducted to observe the influence of social relationships and self-esteem towards the purchase of non-essential needs and the intention to add more debt among low-income groups in the plantation sector in Sabah. The word tahsiniyyat used in this study refer to non-basic expenses which is a requirement of the form of comfort and beauty. By using a questionnaire, we get 378 responses from low-income household individuals. The data analysis was carried out through Partial Least Squares-Structural Equation Modeling (PLSSEM) techniques by using the SmartPLS 2.0 M3 software. The results were statistically demonstrated their positive significant relationships between social relationships and selfesteem towards debt spending of tahsiniyyat needs and debt intention. This research is very beneficial in predicting debt behaviour among low-income group and useful to the monetary policy maker in order to implement the policy and assist this group. A few policy implications as well as suggestions were also discussed in this research.

PSYCHOLOGICAL HEALTH IN THE CONTEXT OF ECONOMIC BEHAVIOR: THEORETICAL REVIEW OF THE PROBLEM

The article presents a theoretical overview of the problem of psychological health in the context of economic behavior. It is stated that the relevance, theoretical and practical significance of the problem of psychological health is confirmed in numerous researches of modern scientists, which allows to mark it as one of the priority among the developed psychological problems. In the context of constant socio-economic changes, the problem of the psychological health of the personality becomes of particular importance. Economic changes, which is one of the components of the transformation processes that take place in Ukrainian society, set the specific environmental context of the functioning of the psychological health of a personality. The content of "psychological health" concept and its criteria are considered. The following approaches to understanding this phenomenon are indicated: socio-psychological, ontogenetic, professional, moral-psychological, general-psychological and resource. It is stated that scientists clearly define such a perspective of psychological health functioning as the optimality and constructiveness of interaction with the environment and the world as a whole, which makes it possible to consider adequate economic behavior as one of the aspects of such interaction. The analysis of the concept of "economic behavior" in terms of economic and psychological science, as well as its types such as financial behavior, conservation behavior, debt behavior, investment behavior, "poverty behavior" is presented. On the basis of the analysis of modern theoretical and empirical researches the connection of psychological health and economic behavior is determined, the contribution of a number of psychological characteristics to the functioning of different types of economic behavior is revealed. It is noted that the economic side of life of a modern person living in a transformational society is one of the significant variables in the formation of psychological health, the condition of which, in this context, is economic behavior that is adequate to the ongoing and predicted changes.

Research on Effects of Basic Pension Scheme on Household Debt Behavior

The current scale of debt of Chinese families has expanded rapidly in recent years. This article discusses the macro factors influencing household debt-basic pension insurance and verifies their relationship. Based on the micro-data of the 2014 China Family Tracking Survey, this paper analyzes the impact of China’s basic endowment insurance on household debt behavior. Using Tobit model regression, it is found that the basic pension insurance has significant positive effects on household debt level under the overall sample. Further sub-sample research on the heterogeneity characteristics of families shows, the positive correlation between basic pension insurance and household debt ratio exists in rural households and high-income families. At last, the above conclusions were confirmed by IV-Tobit regression using the average contribution rate and the institutional dependency ratio of the province where the family is located as an instrumental variable. This shows that although the increase in social security coverage has enhanced the family’s ability to counter risk, it also needs to prevent the negative externalities brought about by excessive debt of residents.

Why African Companies Are Absent on the Bond Market? An Explanation through Companies Listed on the BRVM

This research provides some answers to the question of the limited presence of African companies in the bond markets. Indeed, from a sample of companies listed on the BRVM and panel models tested by the Generalized Moment Method (GMM) developed by Blundell and Bond [1], we study the behavior of the variables usually retained in the work on the determinants of bond issues. We show that the reputation, renegotiability and maturity of the debt, as well as the level of wealth created, determine the debt behavior of companies. Also, any financing strategy by bond issues should take into account these determinants.

The gender gap in over-indebtedness

We document a significant gender gap in over-indebtedness, as we find women to be less likely to become over-indebted even after controlling for risk attitude, financial literacy and socio-demographic characteristics. However, once we account for loan purposes the gender gap diminishes. Our findings highlight the importance to account for loan purposes when analyzing individuals’ debt behavior.

The Importance of Debt for Household Risky Asset Allocation and Portfolio Structure

When households decide on risky asset holdings, they do not make the decision in isolation from their debt structure and obligations, vice versa. We examine the joint behavior of debt and financial asset portfolio decisions, while existing empirical research on debt and asset portfolio choices has proceeded separately. In this paper, we first test the relationship between debt structure and asset allocation, then estimate the determinants of debt structure and asset allocation simultaneously. Using the 2016 Survey of Consumer Finances (SCF) data, we find robust evidence that debt structure affects households’ risky asset allocation decisions and identify, in this simultaneous decision-making process, the demographic and financial factors that can contribute to the household overall financial portfolio structure.

The Role of Personality Traits in Assessing the State of the Russian Society by Persons with Different Economic Behaviour

The article describes what indicators of the condition of society are used in Russia and abroad. Publications in which happiness, subjective economic well-being, life satisfaction, subjective quality of life and others are considered in this capacity, are reviewed. The question of the role of personality traits in assessing the situation in the country is raised, as well as the impact of these assessments on the economic behaviour of citizens. The results of the empirical study of 260 subjects using questionnaires, which include questions about the political, psychological, social, economic situation in the country, economic behaviour and psycho-diagnostic tests, are presented. The interrelations of assessments of the political and psychological situation in the country with personal traits and debt behaviour are revealed. Extraversion and openness to experience are negatively, and conscientiousness is positively interconnected with positive assessments of the state of the Russian society. The differences in assessments of the state of the Russian society among respondents with different investment preferences are described.

The Impact of Government Debt on Economic Growth

This paper aims to examine the effects of public debt on economic growth by using a regression method of a fixed effect model with the data of 58 developed countries (high-income countries) and developing countries (low and medium income countries). The analysis shows that public debt (both in terms of scale and rate of increase), inflation, government spending and unemployment are negatively associated with economic growth. A reasonable expenditure plan (in this case, consumption expenditure) can control the impact of public debt on economic growth. More particularly, public debt has a positive impact on economic growth if consumption expenditure is larger than 14-16% of the GDP. Other factors such as TFP (Total-Factor Productivity), trade and public investment can stimulate growth in the observed sample. Interestingly, for high-income countries, economic growth rate in Assembly-elected President countries is higher than that in the Presidential countries.
 Keywords
 Public debt, consumption expenditure, economic growth, developing countries, fixed effect model
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Does studying economics in college influence loan decisions later in life?

ABSTRACTThe authors investigate the relationship between undergraduate economics coursework or majoring in economics and the debt behavior of the college graduates. The data come from the Baccalaureate and Beyond (B&B) longitudinal survey of the National Center for Education Statistics. College graduates who took courses in undergraduate economics or majored in the subject appear less willing to assume debt through auto loans or federal student loans. If they do assume debt, the amount of the monthly payment (auto loans) or the total amount owed (student loans) is less for college graduates with economics coursework or an economics major compared with other students. The findings are robust for college graduates one year and four years after graduation.

Testing explosive behavior of public debt in OECD countries

ABSTRACTThis paper examines the beginning and end of potentially speculative explosive public debt patterns occurring in 29 major OECD countries. The method we use is most appropriate for practical implementation with a time series and delivers a consistent date-stamping strategy for the origination and termination of multiple explosive behaviors. Our results also test that most OECD countries, except for Israel, Luxembourg, and Turkey, have experienced periods of explosive public debt. The stationarity of public debt varies by country. Approximately two-thirds of the explosive periods occurred prior to 2012. Based on the scale, structure, and safety of government debt for dynamic monitoring and evaluation, governments can improve risk management measures.