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Author: Lim, Sonya S.
Resulting in 2 citations.
1. Jiang, Danling
Lim, Sonya S.
Trust and Household Debt
Review of Finance 22,2 (1 March 2018): 783-812.
Also: https://academic.oup.com/rof/article/22/2/783/2439518
Cohort(s): NLSY79
Publisher: Oxford University Press
Keyword(s): Bankruptcy; Debt/Borrowing; Discrimination, Age; Financial Behaviors/Decisions; Foreclosure; Net Worth; Trust

Permission to reprint the abstract has not been received from the publisher.

Using a large sample of US individuals, we show that individuals with higher levels of trust have lower likelihoods of default in household debt and higher net worth. The effect is driven by trust values inherited from cultural and family backgrounds more than by trust beliefs about others. We demonstrate a causal impact of trust on financial outcomes by extracting the component of trust correlated with early-life experiences. The effect of trust is more pronounced among females, those with lower education, lower income, lower financial literacy, and higher debt-to-income ratio. Further evidence suggests that enhancing individuals' trust, to the right amount, can improve household financial well-being.
Bibliography Citation
Jiang, Danling and Sonya S. Lim. "Trust and Household Debt." Review of Finance 22,2 (1 March 2018): 783-812.
2. Jiang, Danling
Lim, Sonya S.
Trust, Consumer Debt, and Household Finance
Working Paper, Social Science Research Network, June 2013
Cohort(s): NLSY79
Publisher: Social Science Electronic Publishing, Inc.
Keyword(s): Debt/Borrowing; Financial Behaviors/Decisions; Trust

Permission to reprint the abstract has not been received from the publisher.

Using a large sample of U.S. individuals, we show that trust is an important determinant of an array of household financial decisions and outcomes including debt management. Individuals with a higher level of trust are less likely to be in debt, miss payments, file bankruptcy, or go through foreclosure. Their households have lower financial leverage, higher retirement savings and assets, and greater net worth. We show a causal impact of trust on financial outcomes by extracting the component of trust correlated with an individual's early life experiences, and also by purging out the component of trust correlated with prior economic success. The effect of trust channels through the beliefs formed in response to the trustworthiness of people one deals with, as well as through personal values of trust and trustworthiness rooted in the family and cultural background. Trust has a more pronounced effect among females and those who have lower education or income. Our further evidence suggests that enhancing individuals' trust, and to the right amount, can improve household financial well-being.
Bibliography Citation
Jiang, Danling and Sonya S. Lim. "Trust, Consumer Debt, and Household Finance." Working Paper, Social Science Research Network, June 2013.