JOHN GATHERGOOD JOHN.GATHERGOOD@NOTTINGHAM.AC.UK
Professor of Economics
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.
Gathergood, J., & Weber, J. (2014). Self-control, financial literacy & the co-holding puzzle. Journal of Economic Behavior and Organization, 107, https://doi.org/10.1016/j.jebo.2014.04.018
Journal Article Type | Article |
---|---|
Publication Date | May 1, 2014 |
Deposit Date | Sep 7, 2015 |
Publicly Available Date | Sep 7, 2015 |
Journal | Journal of Economic Behavior & Organization |
Electronic ISSN | 0167-2681 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 107 |
DOI | https://doi.org/10.1016/j.jebo.2014.04.018 |
Keywords | Consumer credit; Self-control; Financial literacy |
Public URL | http://eprints.nottingham.ac.uk/id/eprint/29811 |
Publisher URL | http://www.sciencedirect.com/science/article/pii/S0167268114001231 |
Copyright Statement | Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0 |
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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0
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