Consumer debt attitudes: The role of gender, debt knowledge and skills

Białowolski, Piotr; Cwynar, Andrzej; Cwynar, Wiktor; Węziak‐Białowolska, Dorota

doi:10.1111/ijcs.12558

Cited by 27 publications

(33 citation statements)

References 96 publications

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“…This finding supports the importance of financial knowledge in the occurrence of over-indebtedness (Campbell 2006;French and McKillop 2016). This dependence can be explained by the fact that better-educated persons have a greater ability to evaluate and foresee their economic capacity to repay the debts (Disney and Gathergood 2011;Białowolski et al 2019). However, it is fundamental to notice that a significant percentage of poorly-educated group of households matches low-income one.…”

Section: Discussionsupporting

confidence: 54%

Over-indebted Households in Poland: Classification Tree Analysis

Wałęga

2020

Soc Indic Res

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Increasing a personal debt burden implies greater financial vulnerability and threats for macroeconomic stability. It also generates a risk of the households over-indebtedness. The assessment of over-indebtedness is conducted with the use of various objective and subjective measures based on the micro-level data. The aim of the study is to investigate over-indebted households in Poland using a unique dataset obtained from the CATI survey. We discuss and compare the usefulness of various over-indebtedness measures across different socio-economic characteristics. Due to the differences in over-indebtedness across single measures, we perform a more complex assessment using a mix of indicators. As an alternative to other commonly criticised over-indebtedness measures, we apply the “below the poverty line” (BPL) measure. In order to obtain the profile of over-indebted households, we use classification and regression tree analysis as an alternative to logit or probit models. We find that DSTI (“debt service to income”) ratio underestimates the extent of over-indebtedness in vulnerable groups of households in comparison with the BPL. We highlight the necessity to use different measures depending on the adopted definition of over-indebtedness. A psychological burden of debts is particularly strong among older and poorly educated respondents. We also find that the age structure of over-indebted households in Poland differs from this structure in countries with a broader access to consumer credits. Our results can be used to enrich the methods of assessing the household over-indebtedness.

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Section: Discussionsupporting

confidence: 54%

Over-indebted Households in Poland: Classification Tree Analysis

Wałęga

2020

Soc Indic Res

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“…Respondents who rated high in their debt literacy were more likely to participate in the credit market. Additionally, Białowolski et al (2020) on the same sample of 1004 Poles find that debt skills can be considered as a strong predictor of consumer debt attitudes. The latest study on a sample of Polish citizens concerned the relationship between financial literacy and the savings behavior.…”

Section: Introductionmentioning

confidence: 94%

Household’s Overindebtedness during the COVID-19 Crisis: The Role of Debt and Financial Literacy

Kurowski

2021

Risks

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The COVID-19 pandemic has shown how important it is to prepare one’s own financial budget for the unexpected loss of income. In this dimension, the financial education of the society plays an invaluable role. It allows us to account for events that may adversely affect personal finances in our budget management decisions. Therefore, the aim of the article is to check whether households with a higher level of financial and debt literacy have better management skills from the perspective of a household’s budget, which in the face of a crisis reduces the risk of individuals not paying their liabilities. Thus, at the turn of June and July 2020, we conducted surveys among 1300 Polish citizens. Using the multinomial logistic regression, we show that people with a higher financial and debt literacy are less affected by overindebtedness. During the crisis, people who have a higher debt literacy are better prepared to manage credit liabilities; in this situation, financial literacy is less important. In addition, the type of credit experience turned out to be significant. Respondents who have experience with consumer loans (potentially high-margin products) are more likely to have debt repayment problems than those with mortgage loans experiences.

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“…Despite the existence of some analyses of debt–happiness relationships on Chinese data, the moderating role of income in the debt–well-being nexus remains understudied. Higher income provides access to more debt and access to different types of debt not always available to lower-income consumers, but at the same time, it also affects debt attitudes (Białowolski et al , 2020). Thus, income acts as a moderating factor of the negative association between debt and subjective well-being (Tay et al , 2017).…”

Section: Introductionmentioning

confidence: 99%

Consumer debt holding, income and happiness: evidence from China

Xiao

Yan

Białowolski

et al. 2021

IJBM

Self Cite

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PurposeThe relationship between debt and happiness is an emerging research topic with significant implications for both theory and practice in economics and business. In China, where the consumer credit market is at an early stage of development, the topic remains under-investigated and the evidence on the debt–well-being link is scarce. The purpose of this study is to examine the association between debt holding and happiness and the moderating role of income in it.Design/methodology/approachData used in the study were from three waves (2013, 2015 and 2017) of the China Household Finance Survey. Fixed-effect regressions on panel data were used for data analyses.FindingsThe results show that any type of debt holding is negatively associated with happiness. Among seven specific types of debts, four types show negative associations with happiness, which in the order from higher to lower associations, are medical, education, other and housing debt. In addition, negative associations between debt holding and happiness vary among income groups. The results suggest that any debt holding potentially decreases happiness for low- and middle-income consumers only. In addition, holdings of three specific types of debts (medical, education and housing debt) may decrease happiness for both low- and middle-income consumers, and holding two types of debts (business and other debt) may decrease happiness for middle-income consumers only.Research limitations/implicationsData used in this study originate from one country only. It limits the generalizability of findings to other countries with different institutional backgrounds and different socio-economic characteristics of populations. The results have implications for researchers who study consumer debt behavior and business practitioners who do businesses with Chinese companies and consumers.Practical implicationsChina is an emerging economy that is at the early stage of credit market development. The results of this study provide helpful information and insights for business practitioners to explore credit markets and serve credit product clients with various income levels in China.Social implicationsThe results of this study are informative for public policies. When introducing credit market-related policies, policymakers should pay attention to people's happiness and to differential welfare effects of holdings of different types of debts and among consumers with various levels of incomes.Originality/valueUnique contributions of this study include using data from the most recently available waves of the China Household Finance Survey (2013, 2015 and 2017) to study the associations between debt holding and happiness. In addition, the findings of this study enrich the literature of debt and happiness by adding evidence from China, the largest emerging economy in the world, which is helpful for future theory building and business practice on the relationship between debt holding and happiness.

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Consumer debt attitudes: The role of gender, debt knowledge and skills

Cited by 27 publications

References 96 publications

Over-indebted Households in Poland: Classification Tree Analysis

Over-indebted Households in Poland: Classification Tree Analysis

Household’s Overindebtedness during the COVID-19 Crisis: The Role of Debt and Financial Literacy

Consumer debt holding, income and happiness: evidence from China

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