Search

Household financial health contributes to the well-being of society. Policy development to improve financial health should be empirically based, but financial health research in Southeast Asia has not been identified. This scoping review aims to examine the literature that discusses household financial health in Southeast Asian countries. This study uses publications from Scopus, Science Direct, Proquest, Emerald, Google Scholar, and library databases from three leading universities in Indonesia. The articles reviewed are articles published in 1998-2021. The preparation of the protocol followed the PRISMA Scoping Reviews Checklist. There are five stages of research: identification of research questions, identification of relevant studies, the selection process for studies, mapping of data, and preparation and reporting of results. The selection process involved two independent reviewers. The literature search yielded 4788 titles, and only 15 articles met the inclusion criteria. The scoping review results explain the constructs of financial health under study, the measurements used, and financial health factors, including demographic, internal, and external factors. This study recommends considering other psychological variables to examine the antecedents and consequences of household financial health. The results of this study have implications for the importance of financial health research to develop strategies to improve financial health. [ABSTRACT FROM AUTHOR]

We exploit the release of a mobile application for a financial aggregation platform to analyze how technology adoption changes consumer financial decision making. The app reduced the cost of accessing personal financial information, and we find that this led to a drop in non-sufficient fund fees. Because of the manner in which these fees are incurred, this represents an unambiguous welfare improvement for users of the platform. The leading explanation for this result appears to be mistake avoidance due to easier access to information. [ABSTRACT FROM AUTHOR]

The global pandemic, previously only a health crisis, has been slowly causing the economic crisis. The government policy to lockdown and apply social distancing affected the social and economic lives of the countries. The policy affected businesses and led companies to lay off their employees. Many households were suffering economically because of this pandemic. This research aims to identify the changes in household financial behaviour during the covid-19 pandemic. This research is vital as it is the first to explore household financial behaviour during a pandemic which uses a quantitative method of an online survey with 635 participants in Indonesia. Participants’ perceptions on their behaviour during the most challenging time of covid-19 (mid-2020) were compared to their current behaviour and the differences were analysed thoroughly. The results show that spending and insurance behaviour did not change during the pandemic, but the saving and investment behaviour increased significantly during the pandemic. Pandemic warns people that they need investment and savings to survive in an emergency. As the pandemic is still ongoing and there were different government policies between the first and fourth waves, the impact on the economy and households needs to be examined in a more extended period.

Universal basic income has gained renewed interest among policy makers and researchers in the United States. Although research indicates that unconditional cash transfers produce diverse benefits for households, public support lags in part because of predicted unemployment and frivolous spending. To understand how Americans would reorganize their lives around unconditional cash transfers, this article examines the relationship between the structure of cash-transfer programs and their usage. We leverage experiments embedded in two nationally representative surveys to assess relationships between payment frequency, payment amount, and respondents' anticipated usage. Though the survey experiments presented widely varying scenarios to survey participants, we saw largely consistent responses. Respondents most commonly reported they would use their payments for regular expenses, paying debts and building savings. Increased payment amounts were positively associated with spending on economic mobility-oriented goals and savings and debt decisions, but increased payment frequencies were negatively associated with these goals. [ABSTRACT FROM AUTHOR]

We examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinance Program (HARP) that relaxed housing equity constraints by extending government credit guarantee on insufficiently collateralized refinanced mortgages. Difference-in-difference tests based on program eligibility criteria reveal a significant increase in refinancing activity by HARP. More than three million eligible borrowers with primarily fixed-rate mortgages refinanced under HARP, receiving an average reduction of 1.45 |$\%$| in interest rate ($3,000 in annual savings). Durable spending by borrowers increased significantly after refinancing. Regions more exposed to the program saw a relative increase in non-durable and durable consumer spending, a decline in foreclosure rates, and faster recovery in house prices. Competitive frictions in the refinancing market hampered the program's impact: the take-up rate and annual savings among those who refinanced were reduced by 10–20 |$\%$|⁠ , with amplified effects for the most indebted borrowers. [ABSTRACT FROM AUTHOR]

This paper offers cross-sectional and data-intensive insights into Robo-advisory portfolio structures. For this purpose, we scrape portfolio recommendations for 16 German Robo-advisors. Our sample accounts for about 78% of assets in the German Robo-advisory market. We analyze about 243.000 pairs of recommended portfolios and their corresponding client characteristics. Our results show that current Robo-advice offers limited individualization. Variables that matter in modern portfolio choice like the amount and nature (beta) of human capital or shadow assets are largely ignored. Instead, portfolio recommendations are designed to meet investor preconceptions or the regulator's understanding of portfolio choice. While ensuring consumer trust and regulatory approval makes business sense, it also limits the economic benefits of Robo-advisors. 1 [ABSTRACT FROM AUTHOR]

There are more young adults today with either no credit history or insufficient credit history to be scored by one of the major credit bureaus than there were before the Great Recession—a reality that is likely an outcome of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009–10. In regressions that include a rich set of controls, we show that measures of young adults missing a credit score in credit bureau data act as a drag on state‐level consumption growth. We demonstrate that this effect is driven by young people's loss of access to credit since the legislation went into effect. [ABSTRACT FROM AUTHOR]

A number of studies have analyzed the determinants of financial inclusion in India, but few if any have focused specifically on the factors that shape women's access to finance. This paper draws on the trove of women‐specific data collected in the fourth round of the National Family Health Survey (NFHS‐4), conducted in 2015–16 in India, to examine the factors that influence women's access to finance. The results indicate that while the forces that shape women's access to finance function at multiple levels, micro‐level factors appear to be powerful drivers of inclusion. The analysis reveals that household‐level economic indicators like wealth, gender of household head and their rural‐urban location are crucial, but so are individual‐level characteristics which explain approximately 83% of the variation in the multilevel regressions. Informal gender norms that govern women's mobility and economic activity crucially influence the ability of women to access loans and open bank accounts. [ABSTRACT FROM AUTHOR]

This article analyzes Americans' perceptions of being debt‐constrained. We focus on which population subgroups reported feeling most debt‐constrained, how this perception was impacted by the COVID‐19 pandemic, and how it relates to financial literacy and retirement readiness. To this end, we analyze two datasets, namely the 2020 and 2021 TIAA Institute‐GFLEC Personal Finance Index files (P‐Fin Index). The evidence shows that, prior to and during the pandemic, one in three American adults felt constrained by their debt. The percentage was even higher among vulnerable subgroups such as Black and Hispanic individuals, those lacking a bachelor's degree, those with lower incomes, and those with low levels of financial literacy. Being debt‐constrained also has long‐term financial consequences, as it is negatively linked to planning and saving for retirement. Finally, we show that financial literacy has a strong connection to both debt and retirement money management, confirming that financial knowledge is essential if people are to be able to manage their debt and build financial well‐being. [ABSTRACT FROM AUTHOR]

Household debt is an important part of household financial decision-making, and commercial medical insurance has gradually become an important tool for households to use in improving their household balance sheets. Based on 2017 China Household Finance Survey (CHFS) data, this paper studies the impact of commercial medical insurance participation on household debt and analyzes the heterogeneity of household conditions, such as the location of the household, the age of the household head, and the health status of members. The study found that households participating in commercial medical insurance are more likely to be indebted, and their degree of debt is higher than that of households without commercial medical insurance. For urban households, young households, and households with healthy members, the participation of commercial medical insurance has a high effect on the likelihood and the degree of debt. Therefore, while strengthening household insurance awareness, the government should promote the strengthening of the risk-resistance function of commercial medical insurance and encourage financial institutions to design products that combine insurance and credit to release households' consumption and investment potential. [ABSTRACT FROM AUTHOR]

• In credit card experiments subjects do not repay debt interest minimizingly. • Instead they use heuristics which are triggered by irrelevant information. • Such information include balances, and which card accumulates more new debts. • In experiment #1 we successfully predict four out of seven of such heuristics. • In experiment #2 we use framing to steer a novel heuristic, the "Cuckoo Fallacy". How do borrowers repay their debts? In two simple debt repayment experiments, we elicit different types of severe deviations from optimal, i.e. debt minimizing, repayment decisions. We show how these deviations can be triggered using supposedly irrelevant information and find evidence for a novel heuristic, the "Cuckoo Fallacy", which is based on the amount of new debt rather than the interest rate. We also demonstrate that simple framing can decrease repayment misallocation, nudging borrowers to more optimal behavior. Our results inform scholars and policy makers on how to improve household's financial decisions. [ABSTRACT FROM AUTHOR]

This article examines the effect of financial trust on the demand for financial advice in Singapore. Using a general population sample, we study how consumers' trust in financial institutions impacts both their advice-seeking and advice-adopting behaviors. Only 4 in 10 respondents state that they usually seek (or adopt) advice from a financial advisor before investing their savings. We find that financial trust is a strong predictor of both behavioral outcomes, even after accounting for endogeneity and a number of covariates. Furthermore, the estimated effect of financial trust on adopt advice is larger than that on seek advice. These results are robust to variations in empirical specifications. Results also reveal that education is positively associated with the demand for financial advice, while ethnic minorities are less inclined to seek or adopt professional advice. Our findings underscore the importance of enhancing consumers' trust in financial institutions as a means to further develop the financial services sector and financial advice markets. [ABSTRACT FROM AUTHOR]

Frequent changes in fiscal policies are the main cause of credit risk. To prevent households from increasing their non-performing loans, the government can use various policies and instruments. One of these tools is tax regulations, with a particular focus on the value-added tax. This paper examines whether tax policies have affected non-performing household loans in Turkey over the period from 2017 to 2021. To acquire meaningful empirical results, the Autoregressive Distributed Lag (ARDL) cointegration model have been applied. The results of analysis indicated that the effect of tax regulations on non-performing household loans is quite strong. It can be demonstrated that the strength of the income effect generated by tax cuts might be robust. [ABSTRACT FROM AUTHOR]

This paper examines how digital finance development affects household risk sharing in China. We provide convincing evidence that households that experience idiosyncratic negative shocks on income growth exhibit a disproportionally lower level of reduction in idiosyncratic consumption growth in regions with better digital financial inclusion. Improved risk sharing through reduction in transaction costs of remittance that digital finance generates, and the liquidity and saving effects that digital financial products provide are two possible mechanisms through which digital financial inclusion affects household risk sharing. However, the development of traditional banking credit market does not appear to promote risk sharing [ABSTRACT FROM AUTHOR]

Making the purchase price fully salient to consumers has been shown to affect demand and equilibrium prices in various markets. Using a setting where part of the home acquisition price is in the form of nonsalient debt, we show this can happen in housing—a market where a typical household makes its largest acquisition. A regulation that made the debt and the total price salient for homebuyers eliminated a large mispricing caused by consumers' inattention to the debt before the regulation. An average homebuyer would lose about $13,300 by acquiring a dwelling with one-standard deviation ($51,000)-higher debt, but this is nearly eliminated after the regulation. To shed light on the underlying channels, we use administrative data and show that young, financially inexperienced, and first-time homebuyers used to overpay the most. The results are not driven by rational channels based on liquidity constraints and adverse selection. Our findings imply that making all-inclusive house price and mortgage features salient at the time of advertising the sale can help avoid unintentional borrowing. This paper was accepted by David Simchi-Levi, finance. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.4253. [ABSTRACT FROM AUTHOR]

• Discussions about household finances are limited to only a small subset of peers. • Higher individual connectedness is associated with more accurate past and expected returns. • This is not its only channel of influence on stock market participation and exposure. Household finances are confidential and discussions are limited to a subset of peers. We collect novel representative survey data to examine separately whether interactions with inner and outer social circles influence return perceptions, expectations, and exposure to a widely known financial instrument in a developed economy with multiple information sources. We find that a respondent's connectedness, proxied by perceived prevalence of information or participation in the small financial circle, improves expectation accuracy indirectly, through boosting accuracy of perceived past returns; and influences stock participation and exposure not only by influencing expectations, but also directly. [ABSTRACT FROM AUTHOR]

Using microdata from China Family Panel Studies (CFPS), this article studies the financial literacy of retired Chinese residents and their asset allocation. This study found that despite numerous related economic decisions made over their lifetimes, the financial literacy of retired Chinese residents is still at a very low level. No matter whether in urban or rural, a large proportion of retired residents are financially illiterate. At the same time, the financial literacy level has a significant impact on the asset allocation of retired residents, and retired residents with low financial literacy levels have a low degree of diversification in asset allocation. Considering that China's average life expectancy has reached 77 years, retired residents will face various financial decisions for a long time to come, relevant policies should be devoted to improving the financial literacy of retired residents, which will help improve their economic and financial safety and enhance their financial welfare. [ABSTRACT FROM AUTHOR]

Financial inclusion is an important determinant of local economic development. Lack of adequate access to formal financial services can have detrimental effects on households, such as hampering liquidity levels. The benefits of financial inclusion could be especially important in Latin America and Caribbean, a region with modest and volatile economic growth, savings, and investment levels. The objective of this paper was to examine the determinants of financial inclusion in Latin America and the Caribbean region. Overall, our results indicate that greater income and education levels are associated with higher probability of financial inclusion. [ABSTRACT FROM AUTHOR]

This study analyses the phenomenon of the high saving rate of China's households from the perspective of bequest motives based on the data of China Household Finance Survey (CHFS). The result shows that, like Japan, the bequest motives of China's households have a significant positive effect on the family saving rate, especially on rural household savings, middle-wealth and low-wealth households, those whose children work outside of the government system and those whose children with low education, indicating that the bequest motives of China's households are more altruistic. This provides a new understanding of the high savings of households in China and can provide a reference for future policy making. [ABSTRACT FROM AUTHOR]

We survey a large sample of Swedish households and connect the responses to administrative data to relate pro-environmental attitudes and values to actual investment decisions. Pro-environment households are not more likely to hold pro-environment portfolios. This results from financial disengagement: they are less likely to own stocks, check pension balances, or make green active retirement planning choices. Green financial engagement is stronger in settings where financial literacy is higher or where informational hurdles are lower. Informational barriers appear to prevent financial market prices and returns from fully reflecting household environmental preferences. [ABSTRACT FROM AUTHOR]

We analyze the effect of financial advice, financial literacy and social interaction on households' retirement saving decisions. Financial advice is the only factor that positively influences individuals' decisions to participate in a retirement plan, while only financial literacy increases risky asset allocation. These two important factors both influence the ultimate retirement account balance. Viewed collectively, we propose that financial advice and financial literacy benefit retirement saving decisions through different channels, they complement each other and they jointly lead to a better ultimate outcome. The evidence is consistent when we further consider quality of advice and self-rated financial literacy. However, social interaction is of little help in facilitating better retirement saving decisions. [ABSTRACT FROM AUTHOR]

We survey 231 undergraduate students to analyze how retail investors' characteristics influence their decision to use a robo-advisor. Characteristics such as the willingness to take risk, extraversion, and optimism are significant in univariate tests but the willingness to take risk and the internal locus of control are significant in multivariate settings. Participants who use the robo-advisor invest more and are more likely to also invest on their own in both stocks and bonds. We also find statistically significant differences between participants who exclusively use the robo-advisor for investments in stocks and bonds and participants who use the robo-advisor and invest some money in stocks and bonds on their own. [ABSTRACT FROM AUTHOR]

Abstract Social expenditure plays an important role in European Union (EU) countries. It improves the lives of citizens whose welfare is endangered due to poverty or illness. However, social expenditure represents a considerable share of the budgets of EU member states. Despite evident similarities in their levels of development, EU countries show apparent differences in social expenditure levels. Therefore, this work aims to determine the similarities and differences between EU countries in this regard. The analysis uses clustering methods, such as hierarchical cluster analysis and the k-means, to divide countries into homogeneous groups. The research demonstrates significant differences between EU countries in the years 2008–2018, which resulted in a low number of objects (countries) in the identified groups. In the case of 6 out of 28 countries, it was not possible to assign them to any group. The research proves that EU countries should take more care when organising their social policy, taking into consideration cultural and social factors.

We introduce a measure to quantify shared information within household financial portfolios under extreme events. We employ mutual information and copula entropy to capture tail dependencies among investment assets. We then study the impact of socio-economic factors on proactive financial behaviors using data from the 2022 Survey of Consumer Finances and highlight the necessity for tail-informed diversification strategies. Our findings underscore the importance of accounting for nonlinear dependencies to safeguard against unanticipated risks in extreme market scenarios. • This study introduces a measure to capture tail dependencies in household financial portfolios using mutual information and copula entropy. • The algorithm and estimation process are provided for estimating copula densities and computing mutual information in tail regions. • The impact of socioeconomic factors on household financial behaviors is examined using data from the 2022 Survey of Consumer Finances, and the importance of tail-informed diversification strategies is highlighted. [ABSTRACT FROM AUTHOR]

Copyright of Deutsches Institut für Wirtschaftsforschung: DIW-Wochenbericht is the property of DIW Berlin and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The consumer debt of households in Germany totals in the triple-digit billions and is characterized by a wide range of interest rates. Despite the high volume of debt, many people do not know the terms of their consumer credit contracts. This report analyzes new survey data on general knowledge about typical forms of consumer credit, such as the overdraft facility and consumer loans. Women tend to know less about the interests they pay and are less financially literate. Financial literacy correlates with being informed about interest rates, but is independent of the incidence of consumer debt in general. An experiment reveals respondents are fundamentally price sensitive and that cost display influences the decision to take out consumer credit. For example, there is a significantly higher willingness to take out a consumer loan when the costs are presented per month in euros compared to per year. Consumer protection in financial services should examine these effects, consider them in an evidence-based manner where appropriate, and adjust information disclosure requirements, especially for the overdraft facility. The research findings also support implementing more financial literacy initiatives, especially for women. [ABSTRACT FROM AUTHOR]

Using panel data from the 2013, 2015 and 2017 China Household Finance Survey (CHFS) and the digital finance index developed by Peking University, this study examines the impact of digital finance on household insurance purchases and explores its mechanisms. The results indicate that digital finance can promote household insurance purchases by increasing residents' financial literacy and their accessibility to internet financial services. A heterogeneity analysis reveals that digital finance has a more positive effect on the insurance purchases of households with fewer assets, lower income and located in less developed and rural areas. Regarding the type of insurance, digital finance enhances the purchase of property and life rather than health insurance. The regression results of household insurance purchases on the three dimensions of digital finance show that the breadth of coverage and depth of usage of digital finance have more significant impacts on household insurance purchases than digitalisation level. Robustness checks with different measures and samples, also addressing potential endogeneity using the instrumental variable approach, show the reliability of our findings. [ABSTRACT FROM AUTHOR]

Whenever a household faces lack of banking payment services and access to funding, it often constraints their everyday activities and the chance to avail the financial services again. Our study explores the possible explanations of why a household becomes financially excluded in an underdeveloped area of Northern Hungary. By using a questionnaire (n = 502) in the spring of 2019, we conducted a covariance-based SEM analysis for detecting the key reasons. We find that the low level of income, high ratio of financial problems and high intensity of short-term borrowings equally and directly contribute to the financial exclusion of the households. Furthermore, we could not confirm any direct effects of the banking service availability, although bank services significantly influence an intermediary factor, which is the increasing repayment problem in the social environment. Our results verify the responsibility of the regulation in lending and debt collection to achieve a better social policy. [ABSTRACT FROM AUTHOR]

In this article, we projected household financial vulnerability in the COVID-19 pandemic. Using a nationally representative sample of households from the 2017 Panel Study of Income Dynamics (PSID), we analyzed potential changes in financial status in the pandemic resulting from loss of income and savings from discretionary consumption. We provided a ranking of household groups by their financial vulnerability and the first estimate of the number of households at various degrees of financial vulnerability. Our study showed that a substantial part of the universal stimulus payments was made to households that had sufficient income to cover basic needs and those saved by reducing discretionary expenses. For the most financially vulnerable, the first one-time stimulus payment was too little and too late to help with their financial difficulties. Our findings shed light on to whom and in what form the US government should direct financial assistance during the pandemic. [ABSTRACT FROM AUTHOR]

The COVID-19 crisis has led to substantial reductions in earnings. We propose a new measure of financial vulnerability, computable through survey data, to determine whether households can withstand a certain income shock for a defined period of time. Using data from the ECB Household Finance and Consumption Survey (HFCS) we analyse financial vulnerability in seven EU countries. We find that, out of the 243 million individuals considered, 47 million are vulnerable to a three month long income shock (the average length of the first wave COVID-19 lockdown), i.e., they cannot afford food and housing expenses for three months without privately earned income. Differences across countries are stark. Individuals born outside the EU are especially likely to be vulnerable. Being younger, a single parent, and a woman are also statistically significant risk factors. Through a tax-benefit microsimulation exercise, we look into the COVID-19 employment protection benefits, the largest income support measure in the countries considered. Considering as our sample individuals in households where someone receives a salary, we derive household net income when employees are laid-off and awarded the COVID-19 employment protection benefits enacted. Our findings suggest that the employment protection schemes are extremely effective in reducing the number of vulnerable individuals. The relative importance of rent and mortgage suspensions, (likewise, widespread COVID-19 policies), in alleviating vulnerability, is highly country dependent. [ABSTRACT FROM AUTHOR]

We study the financial protection provided by health insurance through two natural experiments—the Affordable Care Act's under 26 provision and Medicare eligibility. In both cases, the coverage expansion sharply reduces medical debt in collections for consumers within the affected ages but does not systematically improve credit outcomes not directly related to medical care. This is consistent with the infrequent repayment rate and lack of persistence on credit reports that we document for medical collections, which mute a key channel through which reductions in medical collections could directly affect the other financial outcomes studied here. These results help clarify the role of health insurance in broader financial health and suggest that, at least among the populations studied here, medical debts in collection may often be a symptom rather than a cause of wider financial distress as measured on credit reports. [ABSTRACT FROM AUTHOR]

This paper studies the adoption and impact of prize-linked savings (PLS) accounts, which offer lottery-like payouts to individual account holders in lieu of interest. Using microlevel data from a bank in South Africa, we show that PLS is attractive to a broad group of individuals, with financially constrained individuals and those with no other deposit accounts particularly likely to participate. Individuals who choose to use PLS increase their total savings on average by 1% of annual income. Exploiting the random assignment of prizes, we present causal evidence that PLS substitutes for lottery gambling but is a complement to standard savings. This paper was accepted by Tyler Shumway, finance. [ABSTRACT FROM AUTHOR]

This paper argues that thresholds in financial contracts act as implicit nudges in consumers' decisions. Exploiting a regulatory change to credit card minimum payments in Mexico, we find that a 1-percentage point change in minimum payments leads to a 0.87-percentage point change in actual payments, both expressed as a percentage of total balances. We decompose the effect of minimum payments into a constraining effect and a reference effect. The former captures the effect of minimum payments as a binding constraint and accounts for 59% of its total effect. The latter captures any remaining impact of changes in minimum payments beyond their constraining effect and represents 41% of the total. In turn, 67% of the reference effect is explained by the multiple heuristic: the tendency of consumers to pay whole-number multiples of the minimum payment. This paper was accepted by Kay Giesecke, finance. [ABSTRACT FROM AUTHOR]