Debt types and burdens by family structures

Xiao, Jing Jian; Yao, Rui

doi:10.1108/ijbm-07-2019-0262

Cited by 20 publications

(29 citation statements)

References 54 publications

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“…Results highlight the significant moderating role of financial capability in the association between debt delinquency and financial stress, which is the unique contribution of this study to the literature since previous research did not focus on this topic (Tay et al, 2017;Xiao & Yao, 2020;Xiao et al, 2019). Surprisingly, the results suggest that among consumers with debt delinquencies, financial capability is positively associated with financial stress.…”

Section: Discussionmentioning

confidence: 57%

“…Based on the 2018 NFCS (FINRA IEF, 2019), 19% of households were late in mortgage payment, 16% were charged late fees for credit card payment, and 42% were late in student loan payments among each type of debt holders. Consumer heterogeneity is also shown in debt delinquency among families with various lifecycle stages (Xiao & Yao, 2014) and structures (Xiao & Yao, 2020). Debt delinquency is an indicator of financial difficulty that can be related to financial stress.…”

Section: Debt Delinquency and Financial Stressmentioning

confidence: 98%

“…However, consumers face many risks that result in income shocks, in that case, consumers need to borrow to smooth consumption. In addition, consumers need to borrow to live a normal life (Xiao & Yao, 2020). Normal life means in a society, certain portions of consumers borrow for certain consumption purposes such as mortgage for housing or student loan for attending college.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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The Able Worry More? Debt Delinquency, Financial Capability, and Financial Stress

Xiao

Kim

2021

J Fam Econ Iss

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Research on the link between debt and financial stress is emerging. This study was one of the first attempts to examine the association between debt delinquency and financial stress and the moderating role of financial capability in the association. Delinquencies in three types of debts were examined: (a) mortgage, (b) credit card, and (c) student loan. With data from the 2018 U.S. National Financial Capability Study, multivariate regression results showed that payment delinquencies of mortgage, credit card and student loans were positively, while financial capability was negatively associated with financial stress. Further, surprisingly, the results implied that among consumers with debt delinquencies, financial capability may increase financial stress. If both financial capability's direct and interactive effect were considered, financial capability may decrease financial stress at much smaller rates than those without debt delinquencies. The situation was the worst among consumers with multiple delinquencies, in which the potential net effect of financial capability on financial stress was positive. The results of this study have implications for consumer financial service practices.

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Section: Discussionmentioning

confidence: 57%

Section: Debt Delinquency and Financial Stressmentioning

confidence: 98%

Section: Conceptual Frameworkmentioning

confidence: 99%

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The Able Worry More? Debt Delinquency, Financial Capability, and Financial Stress

Xiao

Kim

2021

J Fam Econ Iss

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“…Ideally, consumers do not need to borrow if they possess adequate resources. Yet, in a developed economy, where credit markets provide access to resources and living standards are high, borrowing is common, and consumers borrow to accommodate their lifecycle consumption needs (Xiao and Yao, 2020). However, as confirmed by previous research (Tay et al , 2017), debt is also an indicator of resource deficiency that may correlate with the lack of happiness.…”

Section: Discussionmentioning

confidence: 99%

“…Accordingly, the lack of access to debt, often associated with financial exclusion, poses a threat to the satisfaction of consumers (Attanasio, 1994; Crook, 2003; Jappelli and Pagano, 1989). Consumer borrowing is common in developed countries, and demands for borrowing differ for consumers at different lifecycle stages or family structures (Xiao and Yao, 2014, 2020). Consumer borrowing motives can be diverse, from meeting daily expenses to making major purchases and leveraging for investment purposes.…”

Section: Introductionmentioning

confidence: 99%

Consumer debt holding, income and happiness: evidence from China

Xiao

Yan

Białowolski

et al. 2021

IJBM

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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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An Analysis of Finnish Debtors Who Defaulted in 2014–2016 Because of Unsecured Credit Products

Majamaa

Lehtinen

2022

J Consum Policy

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Consumer credit has become an important element of the economy despite the negative effects: Over-indebtedness has wide-ranging repercussions affecting consumers and society as a whole. We analysed the debt judgements (N = 4,095) of Finnish district courts from 2014 to 2016, as well as administrative data on debtors. Our focus was on the position of consumers on the credit market and their consumption-related problem debts, namely instant loans, extensive consumer credit, and credit-card as well as distance-selling indebtedness. Regarding the four credit products, first we considered the average amount of outstanding debt and then we looked at the sociodemographic and socioeconomic characteristics of the debtors. The results revealed that the average outstanding debt (€) varied according to the credit product and that the highest average amount originated from extensive consumer credit. Instant loans and distance-selling indebtedness caused debt problems especially among low-income young adults, adverse selection seemingly being one factor behind instant-loan-related debts. Extensive consumer credit and credit-card indebtedness were behind debt judgements against older consumers with a good socioeconomic position and numerous previous loans. This is a moral-hazard situation whereby borrowers may have more information about their total amounts of debt than the lenders. We suggest that, in many cases, debt problems reflect an abundant supply of consumer credit, which seems to foster asymmetric information, the consumer’s position and competence to act in the credit market, as well as various overall risk factors. The findings highlight the need to strengthen consumers’ financial skills and for loan products that meet the needs of low-credit-rated consumers. Moreover, lenders should act responsibly in the current credit market.

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Debt types and burdens by family structures

Cited by 20 publications

References 54 publications

The Able Worry More? Debt Delinquency, Financial Capability, and Financial Stress

The Able Worry More? Debt Delinquency, Financial Capability, and Financial Stress

Consumer debt holding, income and happiness: evidence from China

An Analysis of Finnish Debtors Who Defaulted in 2014–2016 Because of Unsecured Credit Products

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