The threshold effects of household indebtedness on multidimensional poverty

Abstract

DeclarationBy submitting this dissertation electronically, I declare that the entirety of the work contained therein is my own, original work, that I am the sole author thereof (save to the extent explicitly otherwise stated), that reproduction and publication thereof by Stellenbosch University will not infringe any third party rights and that I have not previously in its entirety or in part submitted it for obtaining any qualification.This dissertation includes two published and one accepted but not yet published original papers in peer-reviewed international journals. The fourth paper representing chapter eight is ready for submission for peer review. The development and writing of the papers (published and unpublished) were the principal responsibility of myself and, for each of the cases where this is not the case, a declaration is included in the dissertation indicating the nature and extent of the contributions of co-authors. AbstractGlobal household indebtedness has reached unprecedented levels over the past few decades.The household sector has had to cope with significant losses in income and wealth as well as the burden of debt service since the beginning of the financial crisis. Research focus on this phenomenon, together with its social implications, has grown. This study uses the National Income Dynamics Study (NIDS) data to empirically investigate the effects of household debt on multidimensional poverty. This was achieved through four independent research papers meant to address different angles of the subject. Chapter 5 provides a snapshot of the prevalence of over-indebtedness, using various international indicators and the National Credit Regulator (NCR) indicator, and describes which households are over-indebted. A total of eight percent of South African households are overindebted, and 61.4 percent of those households are found in the lowest income category (R0 -R2 000), spending more than 45 percent of their household income on debt repayments, which is beyond levels that are considered sustainable. The alarming revelation is that, according to the unsecured debt indicator, 15.2 percent of households are over-indebted, while 11 percent of households are driven below the relative income poverty line after making debt repayments. Stellenbosch University https://scholar.sun.ac.za 3The racial distribution indicates that households headed by Africans are overrepresented (79%).Most over-indebted households are found amongst those who own their places of residence (78.6%), do not receive government grants (71.7%), are male (53.8%), and have an unemployed household head (53.5%).Chapter 6 examines the presence of thresholds in the debt-poverty nexus at micro level, i.e. the tipping point above which debt is associated with more multidimensional poverty. By applying the Generalised Additive Model (GAM) using regression splines, the study finds the existence of critical tipping points between household debt service-to-income ratio and multidimensional poverty along with other explanatory variables (age...

Rare Potential Poor Household Identification With a Focus Embedded Logistic Regression

“…The mean values of the government subsidy funds for housing construction among PRPHs and PUPHs (4333.33 and 4111.11 CNY) were lower than those of the sample (8196.28 CNY). The mean values of the debt for housing construction among PRPHs and PUPHs (5750 and 12000 CNY) were higher than the mean level of the data (3803.27 CNY), and Ntsalaze et al [28] also stated that high household indebtedness was a severe social scourge. All of the PUPHs did not have complete medical insurance, possibly out of cost concerns [33].…”

“…To predict poverty of household level, Puurbalanta [21] introduced the age of householder, the educational years of householder, and the number of family members. Ntsalaze et al [28] indicated that the educational years of householder were associated with multidimensional poverty, where they also introduced the age of householder, the number of the juveniles under 16, and the number of family members to predict the household's deprivation score. Rupasingha et al [29] indicated that less the quantity of workforce might exacerbate poverty.…”

Household Debt and Country Economic Growth: Does a Magic Threshold Exist?

“…Because the finding in literature is skewed toward the negative effect of household debt on consumption and growth (Alter et al, 2018;Mian et al, 2017;Dynan & Edelberg, 2013) and debt as a predictor and determinant of financial crisis (Alter et al, 2018;Schularick & Taylor 2012;Jorda, Schulauck, & Taylor, 2013, 2016Mian & Sufi, 2010), research dynamism in this area is aimed to find the optimal level of household debt. However, to date, few studies examine this issue (Lombardi, Mohanty, & Shim, 2017;Ntsalaze & Ikhide, 2017), leaving room for a different dimension of study to be conducted. By means of a simple dummy that sets a certain threshold level, Lombardi et al, (2017) find that household debt at 60 percent and 80 percent (of GDP) lower consumption and growth respectively for a pool of countries, whereas Ntsalaze and Ikhide (2017) identify a tipping point of 42.5 percent of household debt to disposable income.…”

Peningkatan Daya Saing Usaha Mikro (UMi) Melalui Keuangan Inklusi

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