Debt Experience Research Articles

Indebtpending: an ugly feeling of youthful financialised futurity

ABSTRACT ‘The future’ is a key object of concern in youth studies and sociology more generally. With the recent rise of the financialisation of everyday life and the consumption of credit, young people’s futures are concomitantly financialised. Our research with young people in Australia discussing their experiences of debt and their financial practices shows how these navigations have implications for how they imagine their own futures. Drawing upon Sianne Ngai’s theorisation of ‘ugly feelings’ and Lauren Berlant’s concept of cruel optimism, we propose the term ‘indebtpending’ to conceptualise how financialisation processes affect and mediate young people’s orientations towards the future. Indebtpending includes ‘in debt’, ‘independence’ and ‘pending’ as elements that work together to create an array of temporal-related feelings towards how aspirations and life plans may play out, some of which feel like aspects of ‘adulthood’ are being foreclosed. Indebtpending is therefore an affective state of youthful imagining where being in debt is a necessity of late capitalism.

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

PurposeThis study examines the impact of debt maturity structure on stock price crash risk (SPCR) in Asian economies and the moderating effect of firm age on this relationship.Design/methodology/approachThe study utilized annual data from 432 nonfinancial firms publicly listed in six Asian countries: China, Hong Kong, Japan, Singapore, Pakistan and India. The observation period covers 14 years, from 2007 to 2020. The sample was categorized into three groups: the entire sample and one group each for developing and developed Asian economies. A generalized least squares panel regression method was employed to test the research hypotheses.FindingsThe results suggest that long-term debt has a significant negative influence on SPCR in Asian economies, indicating that firms with high long-term debt experience lower future SPCR. Moreover, firm age negatively moderates this relationship, implying that older firms may experience a more pronounced reduction in SPCR due to high long-term debt. Finally, firms in developed Asian economies with high long-term debt are more effective in mitigating the risk of a significant drop in their stock prices than firms in developing Asian economies.Originality/valueThis study contributes to the literature in several ways. To the best of the researcher’s knowledge, this is the first of such efforts to investigate the relationship between debt maturity structure and crash risk in Asia. Additionally, it reveals that long-term debt influences SPCR directly and indirectly in Asia through the moderating role of firm age. Lastly, it is likely one of the first studies by a research team in Asia to compare the nonfinancial markets of developed and developing Asian countries.

Millions Owe Trillions

Millions of students in the United States are saddled with trillions of dollars in debt. The debt crisis is a behemoth, though, importantly, it is not monolithic. Experiences of student debt are unequal and uneven, and it is critical to study them as such to address them. There are many organizations bringing attention to the student debt crisis; however, there are surprisingly few institutions dedicated to studying it. Further, there are few studies that link the student debt crisis to other competing, nested crises of the present (e.g., climate change). Using theories of debt and indebtedness to contextualize the student debt crisis, this paper utilizes auto-ethnographic accounts of student debt – as a student debtor and faculty member – and ‘gray literature’ (reports, policies, and statistics) to highlight and analyze the uneven geographies of student debt in the US. The aim of this paper is to argue that a geographic perspective is generative for studying student debt because it allows for a more nuanced understanding of where and why student debt exists and persists with the intention of complementing ongoing activism to abolish student debt. This paper concludes with four potential pathways for future geographic research on student debt and a call for action.

The role of inside debt in banks’ M&A choices: wealth expropriation or conflict resolution?

PurposeThis study investigates the impact of bank CEOs’ inside debt on shareholder benefits in the context of bank mergers and acquisitions (M&A) before the 2008–2009 financial crisis.Design/methodology/approachEmploying an event-study methodology, this analysis delves into market reactions to bank M&A announcements during 2006–2007, encompassing 105 M&As by 79 public commercial banks. This era witnessed heightened risk-taking behavior on the verge of the financial crisis. We explore the relation between relative inside debt and market abnormal returns at M&A announcements and the association between relative inside debt and cash payment preferences in M&As.FindingsEvidence suggests that M&A announcements from banks where acquiring CEOs hold a substantial inside debt experience favorable stock market reaction, particularly for smaller banks. Additionally, banks with elevated CEO inside debt tend to favor cash as a payment mode for M&As.Research limitations/implicationsOne limitation of this study is the short period of data availability. The data used in this study covers only 2006 and 2007, the periods marked by notable risk-taking activities on the verge of the financial crisis. Although this period is perfectly suitable for our investigation, given the prevalence of conflicts between equity and debt holders, it is essential to acknowledge that our findings may not capture changes or trends over time. Nevertheless, the results offer valuable insights into the factors that influence the behavior of the studied population. Future research could employ a longitudinal design to address this limitation and gain a more comprehensive understanding of the dynamics over extended periods.Practical implicationsOur study has significant implications for businesses and policymakers as it provides insights into the factors contributing to financial crises and how compensation mechanisms can be used to moderate bank risk-taking. We propose that CEO inside debt compensation presents a plausible mechanism that boards of directors can incorporate into bank executive compensation contracts. By doing so, they can promote value-enhancing investments and moderate excessive risk-taking, thereby safeguarding the financial stability of individual banks and overall financial system.Originality/valueOur study sheds light on the beneficial role of bank CEO inside debt for shareholders, contributing empirical backing to the conflict resolution viewpoint in the discourse on wealth appropriation. From a regulatory stance, our findings advocate for the inclusion of bank CEO inside debt in executive remuneration agreements. Such a strategy can empower boards of directors to mitigate undue risk and enhance shareholder value in M&As, safeguarding both individual bank and broader financial system stability.

DEBT STRUCTURE AND FIRM PERFORMANCE IN VIETNAMESE STOCK MARKET

This study investigates the relationship between debt structure and firm performance among a comprehensive sample of 546 Vietnamese listed firms over the period 2010 to 2020. The purpose of the research carried out in the article is to establish the relationship between the debt structure and the results of the firm's activities. Employing a fixed-effect method, we analyze the intricate interplay between debt composition and various dimensions of firm performance within the unique economic and institutional context of Vietnam. Our findings reveal a significant and negative association between debt structure and firm performance, shedding light on the intricate dynamics that shape corporate financial decisions and outcomes in the Vietnamese market. Specifically, our analysis indicates that firms with a higher proportion of debt experience decreased levels of performance across multiple performance metrics, including profitability, growth, and operational efficiency. This negative relationship between debt structure and firm performance underscores the importance of optimal capital structure decisions and strategic financial management for Vietnamese listed firms. Our study contributes to the existing literature by providing empirical evidence that extends our understanding of the nuanced determinants of firm performance within emerging market economies. Moving forward, further research could delve deeper into the underlying mechanisms that drive the observed negative relationship. Additionally, exploring potential moderating factors, such as industry-specific characteristics or changes in economic conditions, could provide a more nuanced perspective on the interplay between debt structure and firm performance. Ultimately, this study contributes to the ongoing dialogue on optimal capital structure decisions and their ramifications for the long-term success and sustainability of Vietnamese listed firms, guiding them toward more informed and effective financial strategies.

Entrepreneurial Women in a Saturated Marketplace: How Gendered Power Shapes Experiences of Debt in Rural Cambodia

Debt can be both a path to freedom and prosperity and a source of exploitation. This article analyses the embodied debt relations of rural shop owners in Cambodia to show how gender, class, and ethnic relations of power shape people’s ability to benefit from micro-credit. Drawing on 25 interviews with rural shop owners, the article analyses how the expansion of micro-finance loans for Khmer and Indigenous women to set up micro-businesses with little capital has encouraged an over-supply of rural shops. Struggling shop owners seek to retain loyal customers and perform obligations of altruism rooted in gender and ethnic norms by offering interest-free credit to customers, a practice that brings benefits to communities but entails gendered risks and embodied labour that is disproportionately borne by poorer women. This analysis reveals how formal debt can articulate with traditions of reciprocal assistance in ways that expand reciprocal bonds, while also enabling exploitation. The expectations placed on “entrepreneurial women” neglect the structural conditions of loan saturation and the intersectional relations of social power that shape people’s ability to run small businesses.

Relations of Debt and Credit Networks in Post-Soviet Uzbekistan, Russia and Kazakhstan

Any relations and practices of debt within credit networks include not only pure economic exchange, such as barter or non-monetary exchange, but diverse kinds of social relations of debt. In this article, we consider case studies embedded in the particular context of early and late post-Soviet economic and political crisis, in which economic informalization was characterised by ‘wild capitalism’ or the absence of cash and livelihoods. We observe the coping strategies and mechanisms of economic survival adopted by ordinary people in response to these crises and to the absence of state social and economic institutions. We portray people’s concrete experiences of debt, solidary social relations, and economic exchange based on debt relationships in post-Soviet economies. The case studies are drawn from ethnographic material from Uzbekistan, Russia and Kazakhstan. Our case studies reveal that debt relations are not about two individuals who owe money but serve as the basis for debt-based trade, survival, and socializing networks, as well as part of moral economies. The article builds on scholarly works related to informal economies and survival mechanisms in post-Soviet space, to anthropology of debt, as well as discussion of (dis)trust.

The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households.

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Relationship Between Debt Experiences and Indebtedness of Employees in the Formal Sector in Kenya

This study examined the relationship between debt experiences and indebtedness of formal sector employees in Kenya. Positivism paradigm was used in this study. The study adopted a cross sectional and correlational descriptive research design. The study targeted about 2.4 million employees in the formal sector. Three stage sampling was done, first, cluster sampling and then, stratified sampling and finally random sampling. The study used primary data collected by use of self-administered questionnaires. A pilot test of the questionnaire was conducted on 40 respondents to check its validity and reliability. Using Cockran 1977 formula, 384 questionnaires were circulated. Of the returned 337, 292 questionnaires were considered usable. Cronbach’s alpha for likert type items was found reliable (over 0.7). Data analysis used IBM SPSS statistics 21 for descriptive and correlation analysis. Further, OLS Multiple regression models were used to examine the relationship between debt experiences and indebtedness. The findings reveal that debt experiences have a significant effect on indebtedness. The study recommends increased use of debt advice and counselling by formal sector employees in Kenya.

Effect of Debt Experiences on The Indebtedness of Employees in The Formal Sector in Kenya

This study examined the relationship between debt experiences and indebtedness of formal sector employees in Kenya. Positivism paradigm was used in this study. The study adopted a cross sectional and correlational descriptive research design. The study targeted about 2.4 million employees in the formal sector. Three stage sampling was done, first, cluster sampling and then, stratified sampling and finally random sampling. The study used primary data collected by use of self-administered questionnaires. A pilot test of the questionnaire was conducted on 40 respondents to check its validity and reliability. 384 questionnaires were circulated. Of the returned 337, 292 questionnaires were considered usable. Cronbach’s alpha for likert type items was found reliable (over 0.7). Data analysis used IBM SPSS statistics 21 for descriptive and correlation analysis. Further, OLS Multiple regression models were used to examine the relationship between debt experiences and indebtedness. The findings reveal that debt experiences have a significant effect on indebtedness.

“Not Nearly as Bad”: Social Comparisons and the Debt Experience

Despite the growing awareness of the role that families play in the experience of student borrowing, debt is still understood as a private experience. As student debt becomes more widespread, individuals are increasingly likely to know others with student loans, yet questions remain about how others—friends, acquaintances, and colleagues—may shape the way student borrowers make sense of their debt. This study draws on interviews with recent master’s degree recipients to examine how young adults understand their educational debt in relation to others. The author finds that borrowers are enmeshed in “debt dense” social networks that both normalize debt and facilitate evaluative social comparisons against others that accentuate borrowers’ own efforts and responsibility. These findings demonstrate a role for occupational and educational social networks in shaping borrowers’ experience of indebtedness but also suggest limits to framing student debt as a collective problem.

Debt experience and sources of funding in OMFS training: A survey of current and aspirant OMFS trainees

Oral and Maxillofacial Surgery is unique specialty requiring dual qualification in medicine and dentistry. Since the inception of national recruitment a decade ago, only 70% of available posts have been filled. In a 2019 round, this was a worrying 30%. Questionnaires were sent to trainees at various levels via the Facebook JTG and Registrar groups. Data were collected on debt experience, and awareness of and access to financial assistance. We received 66 responses. The most important sources of funding were NHS work (46%), followed by student finance (25%). Of those surveyed, 79% were ‘concerned’ or ‘very concerned’ about debt. Respondents were interested in receiving more information on a range of sources of funding, such as non-NHS bursaries (81%), NHS bursaries (59%) and NHS work in OMFS (56%). Respondents identified the financial impact (44%), and the effect of personal and family life (41%) as the two biggest drawbacks to second-degree studies. In view of the persistent recruitment issues at the ST3 level in OMFS, it is important to address concerns surrounding second-degree study. Awareness of available support must be raised in order to safeguard the future of our specialty in its current format.

600Homelessness in Hamilton, New Zealand: debt as a tipping point?

Abstract Background The People’s Project (TPP) in Hamilton, NZ takes a Housing First approach to eliminate homelessness. A recent research collaboration provides epidemiological evidence regarding: the people served through TPP; their service engagement; pathways into homelessness; and lost opportunities for early intervention. Methods Data has been collected from a total of 755 TPP participants, including those from client registrations (July 2015-March 2017; n = 695) and a ‘pathways into homelessness’ questionnaire implemented in 2019. All participants were asked questions regarding their experiences of debt, levels of debt and the specific agencies and debtors involved. Results Common pathways into homelessness included individual factors (e.g. substance dependencies, family breakdown), structural factors (lack of suitable and accessible housing, deinstitutionalisation, service failures), and poverty exacerbated by debt. Of this cohort, 62% described current debt, and $2.8million (NZD) of debt was estimated (average of $10000 per person). Debts to government agencies were common and significant, including to Work and Income NZ, student loans, court costs and Housing NZ. Conclusions Financial difficulty, and particularly debt, is an important tipping point into homelessness. High levels of debt exclude people from permanent housing and challenge policies and practices aiming to end homelessness. Furthermore, debt to government agencies - required to invest in homelessness prevention and support - is a systems and policy failure. Key messages Financial difficulties, specifically debt, and systems failures are important tipping points for vulnerable populations into homelessness Debts owed to government agencies by the homeless population provide an opportunity to reorient the system to support homelessness prevention.

The making of financial subjects: A phenomenological study of student debt

While public commentators herald the arrival of the Canadian “student debt crisis,” psychological research into postsecondary student debt proliferates. This study explored the ways in which indebted students themselves understand the meanings and implications of student debt in their own lives, by means of semistructured interviews with nine indebted university students. A hermeneutic phenomenological approach to analysis yielded six themes: indebted by necessity; haunted by distressing thoughts and feelings about debts; living under the pressure to repay debts; living a constrained life; feeling alienated from others; and uncertainty about the meaning of university education. Findings suggest that student debt is characterized by the experience of feeling unable to “live one’s life,” and of looking toward a fragile future after university. By grounding the psychological experience of debt in the socially embedded, historical realities of students’ everyday lives, this work suggests implications for critical psychological understandings of financial subjectivation.

Sophia’s choice: Debt, social welfare, and racial finance capitalism

In this article, I examine normative assumptions about cash transfers as public goods and the lived experience of cash transfers as private debts. Policy makers and social scientists often assume cash transfers are apolitical, value-neutral monetary instruments, which improve upon inappropriate, top-down, universalizing development projects. Instead, I show how cash transfers introduce their own universals, by imagining liberal sovereign subjects, who use credit and financial markets to manage their own financial and developmental needs. I argue that this narrative elides the deep historical and geographical production of racial difference through credit and debt in South Africa’s Western Cape farmlands. I call this phenomenon racial finance capitalism. First, I trace how coloured people have been racialized as debtors for the benefit of capital accumulation across generations. Then, I explore how the contemporary spatial and temporal realities of cash transfer distribution continue to racialize grantees as debtors and dispossess them of their social entitlements. Finally, I demonstrate how grantees draw upon transgenerational experiences of debt to challenge the continued social reproduction of themselves as debtors. Some South African social grantees demand recognition that they are, and have been, net creditors to the nation.

Threshold effects of public debt on economic growth in Africa: a new evidence

PurposeThe purpose of this study is to seek to re-examine the threshold effects of public debt on economic growth in Africa.Design/methodology/approachThis study applies panel smooth transition regression approach advanced by González et al. (2017). The method allows for both heterogeneity as well as a smooth change of regression coefficients from one regime to another.FindingsA debt threshold in the range of 62–66% is estimated for the whole sample. Low debt is found to be growth neutral but higher public debt is growth detrimental. For middle-income and resource-intensive countries, a debt threshold in the range of 58–63% is estimated. As part of robustness checks, a dynamic panel threshold model was also applied to deal with the endogeneity of debt, and a much higher debt threshold was estimated, at 74.3%. While low public debt is found to be either growth neutral or growth enhancing, high public debt is consistently detrimental to growth.Research limitations/implicationsThe findings of this study show that there is no single debt threshold applicable to all African countries, and confirm that the debt threshold level is sensitive to modeling choices. While further analysis is still needed to suggest a policy, the findings of this study show that high debt is detrimental to growth.Originality/valueThe novelty of this study is twofold. Contrary to previous studies on Africa, this study applies a different estimation technique which allows for heterogeneity and a smooth change of regression coefficients from one regime to another. Another novelty distinct from the previous studies is that, for robustness checks, this study divides the sample into low- and middle-income countries, and into resource- and nonresource intensive countries, as debt experience can differ among country groups. Further, as part of robustness checks, another estimation method is also applied in which the threshold variable (debt) is allowed to be endogenous.

Predictors of unmet needs and family debt among children and adolescents with an autism spectrum disorder: Evidence from Ireland

Autism Spectrum Disorders (ASDs) are a life-long neurodevelopmental condition where individuals affected and their families require varying intensities of services and supports. A growing body of evidence provides consensus that early intervention may improve long-term outcomes. The purpose of the paper is to identify the factors that explain variations between families raising a child/children with an ASD in their experience of specific unmet needs and/or experience of debt. Analysis was based on data collected as part of a larger study that examined the economics of autism spectrum disorder in Ireland among 195 families with 222 children aged between 2–18 years of age in 2014/2015. The findings from parental reported responses show over 74 % of children did not receive one or more services in the previous 12 months. Average debt per year per family was €3259. Regression analyses showed that families that had two or more children with an ASD were more likely to experience unmet needs and incur debt specifically because of the child’s condition than families with one child with an ASD. The study shows there is a significant level of unmet need and economic hardship, as evident in the level of ASD related debt which may make current met needs unsustainable in the future. Issues of capacity and geographic inequity that warrant a policy response were also evident.

The Impact of Tax Refund Delays on the Experience of Hardship and Unsecured Debt

The Impact of Tax Refund Delays on the Experience of Hardship and Unsecured Debt

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As interest rate-growth differentials (r-g) turned negative in many countries, governments consider pursuing fiscal expansion and the potential risks involved. Using a large sample of advanced and emerging economies, our analysis suggests that high public debts can lead to adverse future r-g dynamics. Specifically, countries with higher initial public debt experience (i) a shorter duration of negative r-g episodes and a higher probability of reversal, (ii) higher average r-g, and (iii) a more right-skewed r-g distribution, that implies higher down-side risks. Furthermore, high-debt countries experience larger increases in interest rates in response to (iv) an unexpected decline in domestic output and (v) an increase of global volatility. Results are stronger when public debts are denominated in foreign currencies.

Suspensory indebtedness: time, morality and power asymmetry in experiences of consumer debt

The power asymmetries operating through debt include not only the domination of conduct and the extraction of wealth but also unequal struggles to define value. Long-term ethnographic fieldwork on a low-income housing estate in southern England revealed a ‘suspensory’ approach to debt, in which those who cannot afford to comply with their creditors’ debt repayment demands suspend both the temporal point at which debts will end through repayment or enforcement and the dominant morality of repayment through amoral humour about being a bad debtor. This shows that the form of power asymmetry that debtors experience, if any, hinges on their relation to both the morality and temporality of repayment.