The purpose of this study is to explore the usefulness and limitations of six family financial ratio guidelines developed in the United States in assessing the financial situation of households in South Korea. The ratios examined are debt safety, debt service, solvency, liquidity, savings, and capital accumulation. Guidelines for the first three ratios tend to be enforced by lenders and have similar patterns in both countries, but Korean households are much more likely to meet savings and liquidity guidelines than are U.S. households, and are much less likely to meet the capital accumulation guideline. Multivariate logistic regression analyses show complex patterns of effects of demographic variables on whether Korean households meet each guideline. In four out of six logistic regressions, having a graduate or professional degree has a negative effect on meeting the guideline, raising questions about the appropriateness of the guidelines.
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