International Journal of Human Ecology

The Korean Home Economics Association (대한가정학회)
권호 표지

Debt Decision and Repayment of US Young Adults

  • Lee, Jong-Hee (Department of Consumer Sciences, Ohio State University) ;
  • Yang, Se-Jeong (Department of Consumer and Housing Studies, Sangmyung University)
  • Published : 2008.12.30
Download PDF
⟨ Previous Next ⟩

Abstract

This study investigates the characteristics of young debtors at risk of repayment problems. A cumulative logistic model is used in order to examine the effects of explanatory variables on the probability for young adults to pay off debt obligations. The following conclusions can be drawn from the results. First, the high indebtedness of young debtors increases the probability of payment delinquency whereas high income by young debtors decreases the probability. Second, financial emergencies that young debtors experienced and payment delinquency are positively related. Finally, financial resources for emergency needs reduced the probability of being delinquency on payment of household debt.

Keywords

References

  1. Anderson, R., & VanderHoff, J. (1999). Mortgage default rates and borrower race. Journal of Real Estate Research, 18(2), 279-289
  2. Ambrose, B. W., & Capone, C. A. (1998). Modeling the conditional probability of foreclosure in the context of single-family mortgage default resolutions. Real Estate Economics, 26(3), 391-429 https://doi.org/10.1111/1540-6229.00751
  3. Avery, R. B., Calem, P. S., & Canner, G. B. (2004). Consumer credit scoring : Do situational circumstances matter?. Journal of Banking and Finances, 28, 835-856 https://doi.org/10.1016/S0378-4266(03)00202-4
  4. Barth, J. R., & Yezer, A. M. J. (1983). Default risk on home mortgages: A further test of competing hypotheses. Journal of Risk and Insurance, 50(3), 500- 505 https://doi.org/10.2307/252443
  5. Bertaut, C. C., & Haliassos, M. (2002). Debt revolvers for self-control. Mimeo: University of Cyprus
  6. Boyes, W. J., Hoffman, D. L., & Law, S. A. (1989). An econometric analysis of the bank credit scoring problem. Journal of Econometrics, 40(1), 3-14 https://doi.org/10.1016/0304-4076(89)90026-2
  7. Brighton, W. (1999). Reactions to recent Canadian empirical studies on consumer bankruptcies. OSGOODE Hall Law Journal, 37(1&2), 137-142
  8. Bucks, B. K., Kennickell, A. B., & Moore, K. B. (2006). Recent changes in U.S. family finances: Evidence from the 2001 and 2004 Survey of Consumer Finances. Federal Reserve Bulletin, 2006
  9. Cardweb (2005). Late fees. Retrieved August 5, 2005, from www.cardweb.com
  10. Chiteji, N. S. (2006). To have and to hold: An analysis of young adult debt. Network on transitions to adulthood research network working paper
  11. Clauretie, T. M., & Sirmans, G. S. (2003). Real estate finance: Theory and practice. Mason, OH: Thomas Learning
  12. Dcmos: A Network for Ideas & Action. (2007). Generation debt: Student loans, credit cards, and eir consequences, from www.demos.org/pubs/yaes_web_debt. pdf
  13. Draut, T., & Silva, J. (2004). Generation broke. The growth of debt among young Americans. New York Policy Group Demos
  14. Elmer, P. J., & Seelig, S. A. (1998). Insolvency, trigger events, and consumer risk posture in the theory of single-family mortgage default. Journal of Housing Research, 10(1), 1-25
  15. Getter, D. E. (2003). Contributing to the delinquency of borrowers. The Journal of Consumer Affairs, 37(1), 86-100 https://doi.org/10.1111/j.1745-6606.2003.tb00441.x
  16. Goldsmith, E. B. (2005). Consumers economics: Issues and behaviors. Peterson Education, Inc
  17. Gross, D. B., & Souleles, N. S. (2002). An empirical analysis of personal bankruptcy and delinquency. The Review of Financial Studies, 15(1), 319-347 https://doi.org/10.1093/rfs/15.1.319
  18. Hakim, R., & Haddad, M. (1999). Borrower Attributes and the risk of default of conventional mortgages. Atlantic Economic Journal, 27(2), 210-220 https://doi.org/10.1007/BF02300240
  19. Kordichev, A., Powel, J., & Tripe, D. (2005). Structural model of revolving consumer credit risk. Credit Research Centre. The University of Edinburgh Management School. Credit Scoring and Credit
  20. Lewis, H. (2001). The debtor generation. From, http:// www.bankrate.com/brm/news/cc/20010921b.asp
  21. Lyons, A. C. (2004). A Profile of financially at-risk college students. The Journal of Consumer Affairs. 38(1), 56-80 https://doi.org/10.1111/j.1745-6606.2004.tb00465.x
  22. Martin, R. E., & Hill, R. C. (2000). Loan performance and race. Economic Inquiry. 38(1), 136-150 https://doi.org/10.1111/j.1465-7295.2000.tb00009.x
  23. Morgan, D. P., & Toll, I. (1997). Bad debt rising. Current Issues in Economics and Finance, 3 (March 1). Federal Reserve Bank of New York. 1-5
  24. Pascarella, E. T., & Terenzini, P. T. (2005). How college affects students. San Francisco: Josey-Bass
  25. Pinto, M. B., & Mansfield, P. M. (2006). Financially atrisk college students: An exploratory investigation of student loan debt and prioritization of debt repayment. NASFAA Journal of Student Financial Aid, 35(2), 22-31
  26. Quercia, R. G., McCarthy, W., & Stegman, M. (1995). Mortgage default among rural, low-income borrowers. Journal of Housing Research, 6(2), 349-369
  27. Redd, K. E. (2004). Lots of money, limited options: College choice and student financial aid. Journal of Student Financial Aid, 34(3), 29-39
  28. Reeder, W. J. (2004). The role of trigger events in ending homeownership spells: A literature review and suggestions for further research. Abt Associates Inc. Retrived 1-23, from http://www.abtassociates.com/ reports/triggers_ final_report.pdf
  29. Sahadi, J. (2005). Credit-card delinquencies hit record pain at the pump is a major factor, according to the American Bankers Association. Retrieved September 28, 2005, from http://money.cnn.com/2005/09/28/pf/debt/ delinquencies/index.htm
  30. Springer, T. M., & Waller, N. G. (1993). Lender forbearance: Evidence from mortgage delinquency patterns. AREUEA Journal, 21(1), 27-46 https://doi.org/10.1111/1540-6229.00602
  31. Stavins, J. (2000). Credit card borrowing, delinquency, and personal bankruptcy. New England Economic Review, July/August, 15-30
  32. Stewart, J. K. (2005). Generation IOU. Credit card debt and college loans are creating financial hardship for many of today's young working women. (April, 27 2005.) Chicago Tribune
  33. Sullivan, A. C., & Fisher, R. M. (1988). Consumer credit delinquency risk: Characteristics of consumers who fall behind. Journal of Retail Banking, 10(3), 53-63
  34. Teik, L. C. (2005). Young, single, and bankrupt. The Sunday Times, January 23. 14
  35. Volkwein, J. F., Szelest, B. P., Cabrera, A. F., & Napierski- Prancl, M. R. (1998). Factors associated with student loan default among different racial and ethnic groups. The Journal of Higher Education, 69(2), 206-237 https://doi.org/10.2307/2649206
  36. Weagley, R. O. (1988) Consumer default of delinquent adjustable-rate mortgage loans. Journal of Consumer Affairs, 22(1), 38-54 https://doi.org/10.1111/j.1745-6606.1988.tb00211.x
  37. Zhao, J. (2003). Household debt service burden outlook : An exploration on the effect of credit constraints. The Ohio State University. Ph. D. Dissertation