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Debt and household finance: evidence from the Financial Diaries

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  • Daryl Collins

Abstract

The Financial Diaries data-set is a unique, new set of year-long daily income, expense and financial transactions for households from three different areas of South Africa. These data show that over-indebted households (those that spend 20 per cent or more of their gross monthly income on debt) do not fit one homogeneous profile. Formal debt tends to be responsible for over-indebtedness in the urban areas, while in the rural areas the cause tends to be informal debt. In the urban areas high indebtedness is more prevalent among medium-income and high-income households, whereas in the rural areas it occurs at all income levels. High indebtedness in grant-dependent rural households tends to be persistent, whereas in wage-dependent urban households it is often short-lived. These findings present a new financial picture of poor rural populations that is unlikely to be touched by recent policy measures to address over-indebtedness.

Suggested Citation

  • Daryl Collins, 2008. "Debt and household finance: evidence from the Financial Diaries," Development Southern Africa, Taylor & Francis Journals, vol. 25(4), pages 469-479.
    • Handle: RePEc:taf:deveza:v:25:y:2008:i:4:p:469-479
    DOI: 10.1080/03768350802318605
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    References listed on IDEAS

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    1. Reza Daniels, 2001. "Consumer Indebtedness Among Urban South African Households: A Descriptive Overview," Working Papers 01055, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Jessica Schicks, 2013. "From a Supply Gap to a Demand Gap? The Risk and Consequences of Over-indebting the Underbanked," Palgrave Macmillan Books, in: Jean-Pierre Gueyie & Ronny Manos & Jacob Yaron (ed.), Microfinance in Developing Countries, chapter 8, pages 152-177, Palgrave Macmillan.
    2. James, Deborah & Rajak, Dinah, 2014. "Credit apartheid, migrants, mines and money," LSE Research Online Documents on Economics 59434, London School of Economics and Political Science, LSE Library.
    3. Katarzyna Cieslik & Marek Hudon & Philip Verwimp, 2015. "Unruly Entrepreneurs - Value Creation and Value Capture by Microfinance Clients in Rural Burundi," Working Papers CEB 15-013, ULB -- Universite Libre de Bruxelles.
    4. Rönkkö, Risto & Rutherford, Stuart & Sen, Kunal, 2022. "The impact of the COVID-19 pandemic on the poor: Insights from the Hrishipara diaries," World Development, Elsevier, vol. 149(C).
    5. Jessica Schicks, 2013. "The Sacrifices of Micro-Borrowers in Ghana -- A Customer-Protection Perspective on Measuring Over-Indebtedness," Journal of Development Studies, Taylor & Francis Journals, vol. 49(9), pages 1238-1255, September.
    6. Schicks, Jessica, 2014. "Over-Indebtedness in Microfinance – An Empirical Analysis of Related Factors on the Borrower Level," World Development, Elsevier, vol. 54(C), pages 301-324.
    7. Anubhab Gupta & Heng Zhu & Miki Khanh Doan & Aleksandr Michuda & Binoy Majumder, 2021. "Economic Impacts of the COVID−19 Lockdown in a Remittance‐Dependent Region," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 466-485, March.
    8. Larissa Jennings Mayo-Wilson & Summer K. Peterson & Joshua Kiyingi & Proscovia Nabunya & Ozge Sensoy Bahar & Lyla S. Yang & Susan S. Witte & Fred M. Ssewamala, 2023. "Examining Cash Expenditures and Associated HIV-Related Behaviors Using Financial Diaries in Women Employed by Sex Work in Rural Uganda: Findings from the Kyaterekera Study," IJERPH, MDPI, vol. 20(9), pages 1-14, April.
    9. Deere, Carmen Diana & Catanzarite, Zachary B., 2017. "Who borrows to accumulate assets? Class, gender and indebtedness in Ecuador’s credit market," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    10. Dorothee Crayen & Christa Hainz & Christiane Ströh de Martínez, 2011. "The insurance function of migrants' monetary transfers back home: A case study of South Africa," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(10), pages 17-21, May.

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