 Evolution of Household FinancesJohn E. Silvia () Chapter Chapter 8 in Financial Markets and Economic Performance, 2021, pp 275-306 from Springer Abstract: Abstract Both the supply and demand for household credit associated with the housing crisis reflect cognitive biases, such as the recency bias, that drives borrower and lender expectations. Well-intended, but poorly proscribed, financial deregulation offered a field of experimentation that reinforced the housing crisis. Increases in household debt alone, tells us little about the true financial state of the household. A better approach is the comparison of assets/liabilities—the concept of household net worth. Income statement ratios, such as the interest expense to disposable personal income ratio, provide a view of household finance. This introduces the influence of changes in interest rates, credit availability, and the pace of employment/income growth. Since the financial crisis of 2007–2009, the household debt service ratio remains below the level of early 1980s—a structural break in the series intimates a new model of household supply and demand for credit. Keywords: Household Net worth; Life Cycle Behavior; Age-earnings profile; Net percent of banks tightening Standards; Debt service ratio; Financial Obligations ratio; Time inconsistency (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-76295-7_8 Ordering information: This item can be ordered from DOI: 10.1007/978-3-030-76295-7_8 Access Statistics for this chapter More chapters in Springer Books from Springer |
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