Behavioural characteristics and financial distress

Using a new nationally representative survey of financial capability and experience in the UK and Ireland, I investigate the key factors that cause individuals to experience financial distress. In this context, a key area that I focus on is whether individuals’ behavioural traits, such as their capacities for self-control, planning, and patience, affect their ability to stay out of financial trouble. I find that the variables that proxy for these behavioural characteristics are both statistically significant and economically important for predicting both mild and extreme forms of financial distress, in a regression controlling for demographic and socio-economic factors. Furthermore, behavioural traits emerge as having a stronger impact on the incidence of financial distress than education or financial literacy. The results raise questions about whether policy can be oriented towards improving financial habits and mitigating the impact of behavioural characteristics on personal finances. JEL Classification: C25, D14Behaviour, debt, financial literacy, Financial Strain, Personal Finance

Behavioural Characteristics and Financial Distress

Using a new nationally representative survey of financial capability and experience in the UK and Ireland, I investigate the key factors that cause individuals to experience financial distress. In this context, a key area that I focus on is whether individuals? behavioural traits, such as their capacities for self-control, planning, and patience, affect their ability to stay out of financial trouble. I find that the variables that proxy for these behavioural characteristics are both statistically significant and economically important for predicting both mild and extreme forms of financial distress, in a regression controlling for demographic and socio-economic factors. Furthermore, behavioural traits emerge as having a stronger impact on the incidence of financial distress than education or financial literacy. The results raise questions about whether policy can be oriented towards improving financial habits and mitigating the impact of behavioural characteristics on personal finances.Personal Finance, Financial Strain, Debt, Behaviour, Financial Literacy

Behavioural Characteristics and Financial Distress

Using a new nationally representative survey of financial capability and experience in the UK and Ireland, I investigate the key factors that cause individuals to experience financial distress. In this context, a key area that I focus on is whether individuals’ behavioural traits, such as their capacities for self-control, planning, and patience, affect their ability to stay out of financial trouble. I find that the variables that proxy for these behavioural characteristics are both statistically significant and economically important for predicting both mild and extreme forms of financial distress, in a regression controlling for demographic and socio-economic factors. Furthermore, behavioural traits emerge as having a stronger impact on the incidence of financial distress than education or financial literacy. The results raise questions about whether policy can be oriented towards improving financial habits and mitigating the impact of behavioural characteristics on personal finances.Personal Finance, Financial Strain, Debt, Behaviour, Financial Literacy

Immigrants and Welfare Programmes: Exploring the Interactions between Immigrant Characteristics, Immigrant Welfare Dependence and Welfare Policy

The primary purpose of this paper is to provide a review of the papers within the economics literature that have examined the questions of immigrant welfare use and the responsiveness of immigrants to the incentives created by welfare systems. While our focus is largely on papers looking at the European case, we also draw on studies from the United States, in particular on issues where the European literature is thin. One set of papers asks whether immigrants who are more likely to use welfare are attracted to more generous welfare states. The results from these papers are not clear-cut. Another set of papers asks if immigrants use welfare more intensively than natives and if they assimilate out of or into welfare participation. In most cases, the unadjusted data shows higher use of welfare by immigrants although for some countries, for example Germany, this difference can be explained by differences in characteristics. Yet another set of papers finds that the rate of welfare use by existing migrants can influence the welfare use of newly arrived co-nationals. We illustrate some of these issues by looking at immigrant welfare use in Ireland and the UK. Immigrants in the UK appear to use welfare more intensively than natives but the opposite appears to be the case in Ireland.Ireland, welfare participation, immigrants, U.K.

How are Irish households coping with their mortgage repayments? Information from the SILC Survey

This paper uses information contained within the Survey on Income and Living Conditions (SILC) to examine the ability of Irish households to sustain their mortgage repayments. We calculate mortgage repayment to income (MRTI) ratios for a representative sample of Irish households and examine the distribution of this ratio. In particular, we stratify information on marital, work and educational status along with household composition according to this MRTI. We also examine the distribution of information on household mortgages such as the source, the interest rate paid, the age and tenure, and the monthly repayment of the mortgage according to the same ratio. Finally, the distributional implications for the MRTI of a significant unemployment and interest rate shock are also examined.

Changing Participation Rates in the Euro Area. The Case of the Celtic Tiger

This paper examines the evolution of participation rates in the Euro area, focussing, in particular, on one of the more dynamic Euro area labour markets - that of Ireland’s.

What Lies Beneath? Understanding Recent Trends in Irish Mortgage Arrears

This paper presents a comprehensive analysis of Irish mortgage arrears using a new loan-level dataset which incorporates data from four Irish banks. We identify the main characteristics of accounts in arrears and examine the role of ability-to-pay and equity factors in the recent hike in mortgage delinquency rates. We find that borrowers who took out their mortgage for buy-to-let purposes, those with high loan-to-value ratios and those with high repayment burdens are all more likely to be in arrears. This is also the case for borrowers with properties in regions that have suffered more severe economic shocks, as proxied for by changes in the regional unemployment rate. Our empirical analysis suggests that affordability issues and general macroeconomic developments have had an important and sizeable effect on arrears trends over time, suggesting that policy efforts to target the growing level of mortgage arrears need to take account of these issues.Debt, Mortgage Delinquency, Arrears, Default

How Are Irish Households Coping with their Mortgage Repayments? Information from the Survey on Income and Living Conditions

This paper uses information contained within the Survey on Income and Living Conditions (SILC) to examine the ability of Irish households to sustain their mortgage repayments. We calculate mortgage repayment to income (MRTI) ratios for a representative sample of Irish households and examine the distribution of this ratio across the sample. In particular, we stratify information on marital, work and educational status along with household composition according to this MRTI. We also examine the distribution of information on household mortgages such as the source, the interest rate paid, the age and tenure, and the monthly repayment of the mortgage according to the same ratio. Finally, the distributional implications for the MRTI of a significant unemployment and interest rate shock are also examined.

Single mothers and self help groups.

Paper copy at Leddy Library: Theses & Major Papers - Basement, West Bldg. / Call Number: Thesis1981 .M222. Source: Masters Abstracts International, Volume: 40-07, page: . Thesis (M.S.W.)--University of Windsor (Canada), 1981

BUDGET PERSPECTIVES 2015, PAPER 1. Consumption and the Housing Market: An Irish Perspective. June 2014

The recent financial crisis highlighted the strong linkages between the Irish housing market, real economic activity and key fiscal considerations. Over the period 1995 to 2007, while house prices were increasing rapidly on a persistent basis, key economic aggregates such as consumption and income registered strong growth. In the period since then, the decline in the fortunes of the housing sector have also been mirrored in economy-wide developments. Across countries, empirical estimates testify to the importance of the housing market to wider economic activity; however, this relationship is likely to be particularly strong in an Irish context. In this paper, drawing on recent research conducted at a micro-economic level, we highlight the importance of the housing market for key economic decisions such as consumption and deleveraging. Our results suggest that mortgaged Irish households exhibit a relatively large wealth effect out of housing when compared with other countries. Furthermore, in examining the implications of the significant increase in Irish household debt levels, our analysis also suggests that those households which can deleverage do so, and that the decision to reduce debt levels has negative implications for household consumption