The effect of employment instability on security funds and open-ended credit

다국어 초록 (Multilingual Abstract)

The purpose of this study was to investigate the effect of employment related factors on household saving and the use of credit when controlling for financial security factors, and to compare the effect of employment for two periods. A conceptual framework was developed based on the precautionary saving theory, the permanent income hypothesis, family stress theory, and previous empirical studies. Drawing from risk management, security funds and open-ended credit were selected as dependent variables. Using data on working households in the 1992 and the 1998 Survey of Consumer Finances (SCF), analyses were conducted for a security funds model and an open-ended credit model. The 1992 and 1998 data were used to reflect periods of economic recession and expansion, respectively. Pooled data from the 1992 and 1998 SCF were analyzed to examine macroeconomic impacts on households from the two periods.
As expected, employment related factors affected households' perception of financial security as well as financial difficulties. OLS regression on security funds indicated that factors representing resources, preferences, financial security, and race influenced the amount of security funds in both 1992 and 1998. Employment related factors played an important role in determining the amount of security funds in 1998, but not in 1992. A double hurdle analysis on open-ended credit suggested similar results between 1992 and 1998. Factors representing resources were the most influential in determining the likelihood of having an outstanding balance as well as the amount of the balance. Employment factors were significant in determining the likelihood of having a balance but were not significantly related to the amount. The analyses on pooled data indicated that there was no significant difference in the amount of security funds or outstanding balance of open-ended credit between the periods. However, compared to the self-employed in 1992, the self-employed in 1998 had less security funds and a larger outstanding balance. The study provided a comprehensive understanding of households' financial behaviors related to employment. From the findings, implications for employment and credit related policies, and market segmentations and strategies for credit industry were suggested. The important areas of financial education to help consumers were highlighted.

목차 (Table of Contents)

• TABLE OF CONTENTS = iii
• LIST OF TABLES = vi
• LIST OF FIGURES = viii
• ABSTRACT = ix
• CHAPTER ONE - INTRODUCTION = 1
• Background of the Study = 1
• Significance of the Study = 4
• Statement of Purpose = 9
• Outline of the Study = 10
• CHAPTER TWO - REVIEW OF LITERATURE = 11
• Conceptual Framework = 11
• Risk Management = 11
• Precautionary Saving Theory = 14
• Permanent Income Hypothesis = 18
• Family Stress Theory = 20
• Related Literature = 24
• Employment Instability = 24
• Households' Financial Insecurity = 28
• Household Saving for Precautionary Purpose = 31
• Research on Precautionary Saving = 31
• Studies on Emergency Funds = 35
• Hypotheses on Security Funds = 39
• The Use of Consumer Credit = 41
• Open-ended Credit = 42
• Research on Consumer Credit = 44
• Hypotheses on Open-ended Credit = 50
• CHAPTER THREE - METHODOLOGY = 54
• Data and Sample = 54
• Model Specification and Estimation Method = 56
• Security Funds Model = 56
• Open-ended Credit Model = 58
• Variables and Measurement = 62
• Dependent Variables = 62
• Security Funds Model = 62
• Open-ended Credit Model = 65
• Independent Variables = 66
• Measures of Employment Stability = 66
• Measures of Household Financial Needs = 67
• Measures of Resources = 68
• Measures of Preferences = 69
• Measures of Financial Security = 70
• Other Characteristics of Households = 71
• Estimation Procedure = 71
• CHAPTER FOUR - RESULTS = 76
• Sample Characteristics = 76
• Relationship between Employment and Financial Security = 81
• Financial Security in 1992 = 82
• Financial Security in 1998 = 83
• Results of Multivariate Analyses on Security Funds Model = 85
• Results of OLS Regression for 1992 SCF = 85
• Results of OLS Regression for 1998 SCF = 87
• Results of MLE for Pooled Data = 90
• Results of the Double Hurdle Model on Open-ended Credit = 94
• Use of Open-ended Credit in 1992 = 94
• Bivariate Probit Analysis = 94
• Truncated Regression Analysis = 97
• Use of Open-ended Credit in 1998 = 101
• Bivariate Probit Analysis = 101
• Truncated Regression Analysis = 103
• Use of Open-ended Credit: The Results from Pooled Data = 107
• Bivariate Probit Analysis = 107
• Truncated Regression Analysis = 108
• CHAPTER FIVE - CONCLUSIONS = 116
• Summary and Conclusions = 116
• Security Funds = 117
• Open-ended Credit = 119
• Implications = 123
• Implications for Research = 123
• Implications for Public Policy and Credit Industry = 125
• Implications for Financial Educators and Practitioners = 129
• Limitations and Future Research = 131
• LIST OF REFERENCES = 133
• APPENDICES
• Appendix A - Summary of Hypotheses = 144
• Appendix B - The Financial Asset Levels Used in Developing Security Funds = 145
• Appendix C - The Patterns of 13 Asset Shares by Total Financial Assets = 146
• VITA = 151