Self-control, financial literacy & the co-holding puzzle
We use UK survey data to analyze the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we name the ‘co-holding puzzle’. Approximately 12% of households in our sample co-hold, on average, £3800 of revolving consumer cred...
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| Veröffentlicht in: | Journal of economic behavior & organization 2014-11, Vol.107, p.455-469 |
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| container_title | Journal of economic behavior & organization |
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| creator | Gathergood, John Weber, Jörg |
| description | We use UK survey data to analyze the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we name the ‘co-holding puzzle’. Approximately 12% of households in our sample co-hold, on average, £3800 of revolving consumer credit on which they incur interest charges, even though they could immediately pay down all this debt using their liquid assets. Co-holders are typically more financially literate, with above average income and education. In most estimates co-holding is also associated with impulsive spending behavior on the part of the household. Our results provide empirical support to theoretical models in which households co-hold as a means of managing self-control problems. |
| doi_str_mv | 10.1016/j.jebo.2014.04.018 |
| format | Article |
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| ispartof | Journal of economic behavior & organization, 2014-11, Vol.107, p.455-469 |
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| language | eng |
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| source | Elsevier ScienceDirect Journals; Applied Social Sciences Index & Abstracts (ASSIA) |
| subjects | Approximation Consumer behavior Consumer credit Cost estimates Financial literacy Households Self-control Studies |
| title | Self-control, financial literacy & the co-holding puzzle |
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