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Household liquidity and incremental financing decisions: Theory and evidence

dc.contributor.authorCunha, Ricardo
dc.contributor.authorLambrecht, Bart M.
dc.contributor.authorPawlina, Grzegorz
dc.date.accessioned2014-06-12T14:33:29Z
dc.date.available2014-06-12T14:33:29Z
dc.date.issued2011
dc.description.abstractIn this paper we develop a stochastic model for household liquidity. In the model, the optimal liquidity policy takes the form of a liquidity range. Subsequently, we use the model to calibrate the upper bound of the predicted liquidity range. Equipped with knowledge about the relevant control barriers, we run a series of empirical tests on a panel data set of Dutch households covering the period 1992-2007. The results broadly validate our theoretical predictions that households (i) exhaust most of their short-term liquid assets prior to increasing net debt, and (ii) reduce outstanding net debt at the optimally selected upper liquidity barrier. However, a small minority of households appear to act sub-optimally. Poor and vulnerable households rely too frequently on expensive forms of credit (such as overdrafts) hereby incurring substantial amounts of fees and fixed borrowing costs. Elderly households and people on social benefits tend to accumulate too much liquidity. Finally, some households take on expensive short-term credit while having substantial amounts of low-yielding liquid assets.por
dc.description.versioninfo:eu-repo/semantics/acceptedVersion
dc.identifier.citationCUNHA, Ricardo ; LAMBRECHT, Bart M. ; PAWLINA, Grzegorz - Household Liquidity and Incremental Financing Decisions: Theory and Evidence. Journal of Business Finance & Accounting. ISSN 0306-686X. Vol. 38, N.º 7-8 (2011), p. 1016–1052por
dc.identifier.doi10.1111/j.1468-5957.2011.02248.x
dc.identifier.eid80053906974
dc.identifier.eissn1468-5957
dc.identifier.issn0306-686X
dc.identifier.urihttp://hdl.handle.net/10400.14/14603
dc.identifier.wosWOS:000296459100010
dc.language.isoengpor
dc.peerreviewedyespor
dc.publisherWiley
dc.subjectHousehold financepor
dc.subjectLiquidity managementpor
dc.subjectNet debtpor
dc.subjectBrownian motionpor
dc.titleHousehold liquidity and incremental financing decisions: Theory and evidencepor
dc.typejournal article
dspace.entity.typePublication
oaire.citation.endPage1052
oaire.citation.issue7-8
oaire.citation.startPage1016
oaire.citation.titleJournal of Business Finance and Accounting
oaire.citation.volume38
person.familyNamePawlina
person.givenNameGrzegorz
person.identifier.orcid0000-0002-6664-5616
person.identifier.scopus-author-id8440610300
rcaap.rightsopenAccesspor
rcaap.typearticlepor
relation.isAuthorOfPublicationab7e7ee4-0147-47e5-9c50-465ae340195e
relation.isAuthorOfPublication.latestForDiscoveryab7e7ee4-0147-47e5-9c50-465ae340195e

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