Self-control, financial literacy & the co-holding puzzle
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...
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| Format: | Article |
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Elsevier
2014
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| Online Access: | https://eprints.nottingham.ac.uk/29811/ |
| _version_ | 1848793857266810880 |
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| author | Gathergood, John Weber, Jörg |
| author_facet | Gathergood, John Weber, Jörg |
| author_sort | Gathergood, John |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | 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. |
| first_indexed | 2025-11-14T19:06:57Z |
| format | Article |
| id | nottingham-29811 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:06:57Z |
| publishDate | 2014 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-298112020-05-04T16:45:45Z https://eprints.nottingham.ac.uk/29811/ Self-control, financial literacy & the co-holding puzzle Gathergood, John Weber, Jörg 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. Elsevier 2014-05-01 Article PeerReviewed Gathergood, John and Weber, Jörg (2014) Self-control, financial literacy & the co-holding puzzle. Journal of Economic Behavior & Organization, 107 . pp. 455-469. ISSN 0167-2681 Consumer credit; Self-control; Financial literacy http://www.sciencedirect.com/science/article/pii/S0167268114001231 doi:10.1016/j.jebo.2014.04.018 doi:10.1016/j.jebo.2014.04.018 |
| spellingShingle | Consumer credit; Self-control; Financial literacy Gathergood, John Weber, Jörg Self-control, financial literacy & the co-holding puzzle |
| title | Self-control, financial literacy & the co-holding puzzle |
| title_full | Self-control, financial literacy & the co-holding puzzle |
| title_fullStr | Self-control, financial literacy & the co-holding puzzle |
| title_full_unstemmed | Self-control, financial literacy & the co-holding puzzle |
| title_short | Self-control, financial literacy & the co-holding puzzle |
| title_sort | self-control, financial literacy & the co-holding puzzle |
| topic | Consumer credit; Self-control; Financial literacy |
| url | https://eprints.nottingham.ac.uk/29811/ https://eprints.nottingham.ac.uk/29811/ https://eprints.nottingham.ac.uk/29811/ |