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Something will turn up? Financial over-optimism and mortgage arrears

  • Dawson, Chris
  • Henley, Andrew

This paper investigates the association between unrealised financial expectations (over-optimism) and subsequent mortgage repayment difficulties, using British longitudinal data. Evidence is provided that an increased probability of mortgage payment difficulties post committal is associated with over-optimism prior to new mortgage advances.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165176512002042
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 1 ()
Pages: 49-52

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:49-52
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Simon Gervais & Terrance Odean, . "Learning To Be Overconfident," Rodney L. White Center for Financial Research Working Papers 5-97, Wharton School Rodney L. White Center for Financial Research.
  2. Janine Aron & John Muellbauer, 2010. "Modelling and Forecasting UK Mortgage Arrears and Possessions," SERC Discussion Papers 0052, Spatial Economics Research Centre, LSE.
  3. G. Reza Arabsheibani & David de Meza & John Maloney & Bernard Pearson, 2000. "And a Vision Appeared unto them of a Great Profit: Evidence of Self-Deception among the Self-Employed," Royal Holloway, University of London: Discussion Papers in Economics 99/9, Department of Economics, Royal Holloway University of London, revised Feb 2000.
  4. Madsen, Jakob Brochner, 1994. "Tests of rationality versus an "over optimist" bias," Journal of Economic Psychology, Elsevier, vol. 15(4), pages 587-599, December.
  5. Sarah Bridges & Richard Disney, 2004. "Use of credit and arrears on debt among low-income families in the United Kingdom," Fiscal Studies, Institute for Fiscal Studies, vol. 25(1), pages 1-25, March.
  6. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, 04.
  7. Richard Disney & Sarah Bridges & John Gathergood, 2010. "House Price Shocks and Household Indebtedness in the United Kingdom," Economica, London School of Economics and Political Science, vol. 77(307), pages 472-496, 07.
  8. Sarah Brown & Gaia Garino & Karl Taylor & Stephen Wheatley Price, 2005. "Debt and Financial Expectations: An Individual- and Household-Level Analysis," Economic Inquiry, Western Economic Association International, vol. 43(1), pages 100-120, January.
  9. Sarah Brown & Karl Taylor & Robert McNabb, 2006. "Financial Expectations, Consumption and Saving: A Microeconomic Analysis," Working Papers 2006006, The University of Sheffield, Department of Economics, revised May 2006.
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