Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100157
Authors: 
Gathergood, John
Weber, Joerg
Year of Publication: 
2012
Series/Report no.: 
CeDEx Discussion Paper Series 2012-02
Abstract: 
We use UK household survey data incorporating measures of financial literacy and behavioural characteristics to analyse the puzzling co-existence of high cost revolving consumer credit alongside low yield liquid savings in household balance sheets, which we term the 'co-holding puzzle'. Approximately 20% of households in our sample co-hold, on average, £6,500 of revolving consumer credit alongside £8,000 of liquid savings. Co-holders are typically more financially literate, with above average income and education. However, we show co-holding is also associated with impulsive spending behaviour on the part of the household. Our results lend empirical support to theoretical models in which sophisticated households co-hold as a means of managing a self-control problem.
Subjects: 
Consumer credit
Self-control
Financial literacy
JEL: 
D03
D10
D12
E21
Document Type: 
Working Paper

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