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Author: Charline Uhr
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Languages : en
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Author: Charline Uhr
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Languages : en
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Author: George Simon Mihaylov
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Category : Households
Languages : en
Pages : 290
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The thesis examines the consequences of household and individual financial decision making in three different areas: mortgages, superannuation and family businesses. The questions posed in each case cannot be tackled using conventional financial databases. I therefore address each case by applying survey methods. First, I examine the socioeconomic impacts of households choosing to take out shared appreciation mortgages (SAMs). Tax and regulatory barriers have impeded the development and use of SAMs in many mortgage markets. Empirical studies on household impacts stemming from SAMs have therefore also been limited. However, the State Government of South Australia has implemented SAMs as a means of enabling and encouraging low-income homeownership, thereby creating a unique dataset of SAM financed households. I survey this population, finding that SAM borrowers benefit from increased budgetary expenditure on discretionary items following take-up, while simultaneously saving on some non-discretionary items relative to control samples of renters and other homeowners from the general population. Furthermore, SAM homeownership also appears to be associated with increased levels of neighbourhood satisfaction and community involvement for borrowers. The results from this study indicate that SAM financed homeownership leads to changes in household behaviour and deserves further consideration by the housing industry and research community. Second, I examine the influence of investor knowledge and the cognitive bias which arises from overconfidence on the advice seeking behaviour of investors in self-managed superannuation funds (SMSFs). I trace whether overestimating one's own technical and financial abilities can hinder the willingness to seek advice. I identify a subset of investors who are not knowledgeable and yet do not seek advice to compensate for this. These investors appear to be overconfident in their ability to manage their SMSF, despite holding under-diversified and less financially sophisticated portfolios when compared to their peers. Given the global rise in investors choosing to manage their own retirement funds and the importance of seeking advice in this context, there are direct policy implications from these findings. They suggest a need to identify and target self-managed retirement investors who display overconfidence since they are the most likely to manage under-performing SMSFs in the longer term. Third, I examine links between the succession planning decisions, operational management and financial performance of small-to-medium sized agricultural enterprises (SMAEs). I differentiate between written, verbal and other succession arrangements to investigate how each type embeds within the broader operational environment of SMAE households. Further tests are performed to see if differences in financial outcomes can be linked with a particular approach to succession. The results indicate that succession planning decisions are positively associated with the use of written business plans and crop insurance, but that this is only true for SMAEs with professionalised written succession arrangements. This was also the only cohort associated with improved return on assets relative to peer agricultural businesses with alternative succession arrangements in place. Given the critical role of succession in the long-term sustainability of family business households, these results have direct implications for farmers and practitioners advising the private agricultural sector. They suggest that the value in planning succession at least partly lies in the value of going down pathways for professionalization.
Author: Jenny Pirschel
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Languages : en
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Author: Sven Michael Spira
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Languages : en
Pages : 0
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This dissertation consists of four distinct chapters.The first chapter presents the joint work with Christophe Spaenjers.We find that individuals with longer subjective life horizons hold higher conditional equity shares, and the effect of a shortening life horizon on portolio choice is offset by bequest motives. In the second chapter,I examine the explanatory power of birth order to financial household decisions. I show that firstborns differ in their financial decision-making from later born siblings. The results highlight the importance of personal family experiences for household choices. In the third chapter,I document that, in surveys, the presence of companions decreases the probability of respondents replying, and increases the probability of respondents overreporting their self-assessed abilities. The overreporting leads to a downward bias in the estimates of the importance of overconfidence for individuals' behavior. The fourth chapter presents joint work with Thomas Bourveau and François Brochet. We identify M&A lawsuits, where plaintiffs allege that the firm hid poor performance related to prior acquisition. Using the filing of a lawsuit as an industry shock, we show findings consistent with a disciplining effect from the lawsuit for the investment behavior of peer firms' managers.
Author: Michael S. Finke
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Category : Electronic Dissertations
Languages : en
Pages : 110
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This dissertation examines household characteristics the impact financial decision making. The first essay explores the role of cognitive ability in numeracy, risk tolerance, credit decisions, wealth and retirement savings and asset allocation and finds that cognitive ability is an important predictor of financial decisions. The second essay develops a new instrument to measure time discounting and models asset accumulation and asset allocation and finds that a factor score of intertemporal behaviors is significantly related to both asset accumulation and asset allocation. The third essay documents the decline in basic financial knowledge among households over 60 using a new financial literacy instrument developed to more accurately capture a household's ability to make effective balance sheet, credit, investment, and insurance choices.
Author: Seok-kyun Hur
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Category : Bayesian statistical decision theory
Languages : en
Pages : 238
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Author: Fernando Lopez (Professor of finance)
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Category : Electronic dissertations
Languages : en
Pages : 121
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This dissertation consists of three essays that examine the determinants of individual financial decision making and the welfare implications of those decisions. In the first essay, I consider an important dimension of individual welfare, namely mental health, to study whether the use of different financial services helped to withstand the damage caused by a large earthquake that hit Chile in February 2010. Using a rich nationally representative panel data set and geographic differences in ground shaking caused by the earthquake as an exogenous source of damage, I find that earthquake insurance reduced the incidence of post-traumatic stress disorder (PTSD) by more than 50% among individuals who lived in properties that were damaged by the earthquake. However, I find no significant effects for the amount of savings and bank relationships. Overall, these results suggest that the welfare impact of financial services is driven by the ability to transfer resources across states of the world, but not through time. In the second essay, I study the extent to which low income students in the U.S. understand and take into consideration the financial aspects of their higher education. Using a rich data set from a large U.S. non-profit organization, I find that low income post-secondary students are poorly informed about three main financial aspects of their higher education: expected income, financing costs and opportunity cost of being enrolled. This result holds for students who are academically talented, have been exposed to financial education (including a semester-long personal finance class) and relevant financial experiences. Furthermore, preliminary results of a randomized controlled trial (N=117) suggest that an hour-long financial education workshop on the main financial aspects of college increases students' GPA by 0.2 points (p-value=0.15) and their ability to receive financial aid from the non-profit organization by 11.4 percentage points (p-value=0.25). Overall, these results suggest that (lack of) financial literacy can affect both educational attainment and financial outcomes of low income post-secondary students. In the third essay, I study if civic capital, defined as the set of values and beliefs within a community that promote cooperation for socially valuable purposes (Guiso, Sapienza and Zingales, 2011), affects the use of deposit accounts among Chilean households. Using an institutional setting of limited supply side barriers for access to deposit accounts and a rich household data set, I find that households from areas with higher levels of civic capital, measured as the rate of registration to vote, are more likely to have savings accounts and hold larger amounts in those accounts. This association is stronger for households that are less educated and less intensive users of communication and information devices such as phone, computer and the internet. These results are consistent with the idea that civic capital helps to overcome educational and informational barriers that limit the demand for deposit accounts.
Author: Lukas Brenner
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Category :
Languages : en
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Author: Bruno Ferman
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Category :
Languages : en
Pages : 126
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This dissertation consists of three essays. The first chapter studies whether credit demand is sensitive to interest rates, to the prominence of interest rate disclosure, and to nudges. Consumer credit regulations usually require that lenders disclose interest rates. However, lenders can evade the spirit of these regulations by concealing rates in the fine print and highlighting low monthly payments. I explore the importance of such evasion in Brazil, where consumer credit for lower and middle income borrowers is expanding rapidly, despite particularly high interest rates. By randomizing contract interest rates and the degree of interest rate disclosure, I show that most borrowers are highly rate-sensitive, whether or not interest rates are prominently disclosed in marketing materials. An exception is high-risk borrowers, for whom rate disclosure matters. These clients are rate-sensitive only when disclosure is prominent. I also show that borrowers who choose this type of financing are responsive to nudges that favor longer-term plans. Despite this evidence, the financial consequences of information disclosure, even for high-risk borrowers, are relatively modest, and clients are less susceptible to nudges when the stakes are higher. Together, these results suggest that consumers in Brazil are surprisingly adept at decoding information even when lenders try to obfuscate the interest rate information, suggesting a fair amount of sophistication in this population. The second chapter (co-authored with Leonardo Bursztyn, Florian Ederer, and Noam Yuchtman) studies the importance of peer effects in financial decisions. Using a field experiment conducted with a financial brokerage, we attempt to disentangle channels through which a person's financial decisions affect his peers'. When someone purchases an asset, his peers may also want to purchase it because they learn from his choice ("social learning") and because his possession of the asset directly affects others' utility of owning the same asset ("social utility"). We randomize whether one member of a peer pair who chose to purchase an asset has that choice implemented, thus randomizing possession of the asset. Then, we randomize whether the second member of the pair: 1) receives no information about his peer, or 2) is informed of his peer's desire to purchase the asset and the result of the randomization determining possession. We thus estimate the effects of: (a) learning plus possession, and (b) learning alone, relative to a control group. In the control group, 42% of individuals purchased the asset, increasing to 71% in the "social learning only" group, and to 93% in the "social learning and social utility" group. These results suggest that herding behavior in financial markets may result from social learning, and also from a desire to own the same assets as one's peers. The third chapter (co-authored with Pedro Daniel Tavares) uses data on checking and savings accounts for a sample of clients from a large bank in Brazil to calculate the prevalence and cost of "borrowing high and lending low" behavior in a setting where the spread between the borrowing and saving rates is on the order of 150% per year. We find that most clients maintain an overdrawn account at least one day a year while having liquid assets. However, the yearly amount of avoidable financial charges would only correspond, on average, to less than 0.5% of clients' yearly earnings. We also show that consumers are less likely to engage in such behavior when the costs of doing so are higher. These results suggest that the spread between the borrowing and saving rates is a key determinant of this behavior.
Author: Thomas Spycher
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Languages : en
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This thesis contains four essays on financial decision making. The first two essays examine the influence of cultural group membership on the accumulation of financial literacy and on intertemporal choice. The chapters exploit the Swiss language border as a natural laboratory to study the influence of culture and document substantial differences in behavior based on a self-collected survey dataset of 15-year olds living along the language border in the canton of Fribourg. An analysis of underlying channels suggests that observed differences in financial literacy and intertemporal choice are rather related to systematic differences in social norms than to differences in time and risk preferences. The third essay investigates the influence of an extended cooling-off period for personal loans. A cooling-off period grants a borrower the right to withdraw from a signed credit contract. Cooling-off periods are a commonly used tool for consumer financial protection, but little empirical evidence exists on its use and how changes in its duration affect consumer behavior. Based on a large sample of loan offers in Switzerland, I document that cooling-off periods are rarely used. Less than 0.6\% of accepted loan offers are withdrawn by the borrower. The extension of the period from 7 to 14 days did not increase the propensity to make use of the right to withdraw but rather increased the cost of regulation as credit providers disburse loans only after the cooling-off period. The last essay examines how the numeracy level of employees is related to the quality of their on-the-job decisions. Employers place significant weight on the numerical skills of employees and the level of numeracy is associated with labor market outcomes. Based on an administrative dataset of a retail bank the study relates the performance of loan officers in a standardized math test to the accuracy of their credit assessments of small business borrowers. Results sug.
