The influence of uncertainty and liquidity constraints on liquid asset holdings of credit card revolvers.

摘要

The main purpose of this dissertation was to explore the credit card revolver's behavior of holding substantial levels of liquid assets. This research includes two stages. In the first stage, factors associated with the likelihood of being financially sufficient revolvers are investigated. Results from this step support precautionary saving motives as explanations for the behavior of simultaneously saving and borrowing. Therefore, based on a precautionary saving model, the second stage further explores how factors related to uncertainty and liquidity constraints affect the level of liquid assets held by credit card revolvers. In addition, an objective precautionary saving model is compared with a subjective precautionary saving model.; Empirical results show that having precautionary saving motives not only increases the likelihood of being financially sufficient revolvers, but also increases the level of liquid assets. This research suggests that revolvers save for precautionary purposes, though this may not be an optimal financial management decision. According to the precautionary saving model, revolvers facing higher uncertainty should hold more precautionary savings in order to buffer the possible future consumption shock. However, the actual amount of accumulated liquid assets is a combined result of both financial planning and consequences of past and current consumption needs. This study shows that expenditure needs relative to household income, which determine the amount of money the household can save, affect revolver's actual holding of precautionary saving, regardless of their subjective level of precautionary saving. Therefore, estimated coefficients of uncertainty and liquidity constraints may not be consistent with what the normative economic theory predicts. This may explain why the empirical effects of some variables, such as health condition and health insurance coverage, turn out to have an effect in the opposite direction of the hypothesized effect in the objective saving model and in the existing literature; however, the results from the subjective precautionary saving model are more consistent with the hypotheses. (Abstract shortened by UMI.)